What CCA rate applies to purpose-built rental construction in Canada?
New residential purpose-built rental construction is Class 1 at 4% declining balance. New commercial construction is Class 1(a.1) at 6%. First-year enhancements under the Accelerated Investment Incentive (AII) apply to acquisitions between November 21, 2018 and the 2028 phase-out, and the 2024 Purpose-Built Rental Housing measure permits 100% immediate deduction for eligible new residential rental buildings meeting the four-unit test acquired between April 16, 2024 and December 31, 2030.
2024 Purpose-Built Rental Housing (PBRH) accelerated CCA. Available for a newly-constructed residential rental building that (a) contains at least four private apartment units OR at least ten private rooms/suites, (b) has at least 90% of residential units used for long-term rental, (c) construction begins on or after April 16, 2024, and (d) is available for use before January 1, 2036. Class 1(q) allowance is 10% CCA in the year the building becomes available for use, rising to a full 100% write-off in year 1 via the PBRH enhancement.
Example: an Ontario developer completes a 12-unit purpose-built rental building on August 1, 2026 with a $6,000,000 building cost (excluding land). Under PBRH, the developer claims $6,000,000 CCA in fiscal 2026 (100% first-year expensing), fully sheltering rental income from other projects and creating a non-capital loss carryforward if income is insufficient.
Commercial or mixed-use construction remains at the 4%/6% Class 1 rates, subject to AII 1.5x uplift on first-year CCA (phased down: 2024 = 1.5x, 2025 = 1.0x, phase-out complete after 2027).
Note: The PBRH accelerated CCA does not apply to substantial-renovation projects, addition-of-units to existing buildings, or short-term rentals. Confirm the four-unit and 90%-long-term tests before relying on 100% first-year expensing.
Source: canada.ca â Purpose-built rental housing accelerated CCA
— Bader A. Chowdry, CPA, CA, LPA — Insight Accounting CPA
Disclaimer: Bader A. Chowdry, CPA, CA, LPA is a Licensed Public Accountant regulated by CPA Ontario. Insight Accounting CPA Professional Corporation is a Chartered Professional Accountant firm. This content is general information only and does not constitute professional advice for your specific facts. Confirm current rules and figures with your own advisor before acting.