CCA Class Guide · Updated July 22, 2026

CCA Class 1 (4%): Buildings

The slowest class, guarding the biggest assets. Buildings depreciate at 4% — after you carve out the land, decide on the rate elections, and think hard about whether claiming is even worth it on a rental.

Rate
4% (6%/10% by election)
Method
Declining balance
First Year (2026)
6% under the RIIP
Applies To
Buildings acquired after 1987

Step One Is Always the Land Split

You buy a commercial property for $800,000. You do not have an $800,000 Class 1 asset — you have a building worth some of that and land worth the rest, and only the building depreciates. If the land is worth $200,000, your depreciable base is $600,000.

The split needs support: property tax assessments, the insurance replacement value, or an appraisal. Allocating aggressively toward the building buys a bigger deduction now and an audit conversation later.

The Math at 4%

A $600,000 building acquired in 2026 claims 1.5× the rate in year one under the Reaccelerated Investment Incentive:

YearOpening UCCMaximum CCAClosing UCC
2026 (RIIP, 6%)$600,000.00$36,000.00$564,000.00
2027$564,000.00$22,560.00$541,440.00
2028$541,440.00$21,657.60$519,782.40

Two elections can speed this up for new non-residential buildings (acquired after March 18, 2007, placed in a separate class by election): 6% for general non-residential use, 10% where at least 90% of the space is manufacturing or processing. And under Budget 2025, eligible new manufacturing buildings acquired on or after November 4, 2025 and in use before 2030 can be written off 100% in year one.

The Rental Property Rules

  • CCA can't create or increase a rental loss. Net rental income of $3,000 before CCA caps the year's claim at $3,000, whatever the maximum says.
  • Each building of $50,000 or more is its own class. No pooling rental buildings together — every property carries its own UCC and settles its own recapture when sold.
  • Recapture is the long game. Real estate tends to sell above its depreciated value, so the CCA you claim usually comes back as income at sale. That makes building CCA a deferral strategy, not a permanent saving — worthwhile for many owners, but a decision to make with eyes open, not a box to tick.

Older buildings live elsewhere: pre-1988 acquisitions are mostly Class 3 (5%), and frame or log buildings are Class 6 (10%). The CCA guide covers the general machinery — recapture, terminal loss, and claiming mechanics — in more depth.

Class 1 Questions

No — land never depreciates for tax purposes. When you buy a property, the price must be split between the building (depreciable, Class 1) and the land (not depreciable). The split should be defensible — property tax assessments and appraisals are the usual support — because it's a common audit question.

It's a genuine decision, not a default. CCA can't create or increase a rental loss, so the claim is capped at your net rental income. And because buildings usually sell for more than their depreciated value, CCA claimed over the years frequently comes back as recapture — taxed as regular income — in the year of sale. Claiming defers tax rather than eliminating it; many owners claim anyway for the deferral, and some skip it. Run the numbers for your situation.

Each rental building that cost $50,000 or more must go in its own Class 1 pool rather than being combined. That keeps each building's UCC separate, so selling one building settles its own recapture or terminal loss instead of hiding inside a merged pool.

New non-residential buildings acquired after March 18, 2007 can claim an additional allowance if you elect to put them in a separate class: 6% total for general non-residential use, 10% if at least 90% of the building is used for manufacturing or processing. The election has to be made for the year the building is acquired. Separately, eligible new manufacturing buildings acquired on or after November 4, 2025 and in use before 2030 qualify for a 100% first-year write-off.

Model a building purchase

The free CCA calculator builds the multi-year UCC schedule for Class 1 at any cost and acquisition year.

Open the Calculator

Verified against CRA guidance, Budget 2025 measures, and Bill C-15 as of July 22, 2026. Building classification, elections, and the land split carry real dollar consequences — this page is orientation, not advice. Involve your accountant before the purchase closes, not after.

A Building Is One Asset With a Thirty-Year Paper Trail

Acquisition cost, land split, improvements, elections, eventual sale — faManager keeps the record straight for decades, with the book depreciation your statements need along the way.

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