Any profit you realize on the sale of rental property constitutes a capital gain that you must report in your income tax return. For further information on capital gains and losses, see the guide Capital Gains and Losses (IN-120-V).

Recapture of capital cost allowance

If you dispose of a rental property for more than the purchase price, you may have to add to your rental income for the year of disposition not only a capital gain, but also an amount representing the recapture of capital cost allowance.

For more information, see the Capital Cost Allowance Guide (TPW-130.G-V).

Terminal loss

If the selling price of your rental property is lower than the undepreciated capital cost of the property, the difference between the two amounts could constitute a terminal loss.

For more information, see the Capital Cost Allowance Guide (TPW-130.G-V).