Recapture
Recapture is a real estate term investors use to assess after-tax proceeds, holding structure, timing, compliance exposure, and whether profit is real after CRA/provincial rules.
Why it matters
Recapture matters because it changes after-tax proceeds, holding structure, timing, compliance exposure, and whether profit is real after CRA/provincial rules. The mistake is treating it as paperwork when it is really a deal constraint.
Formula
Recapture generally arises when sale proceeds allocated to a CCA class exceed remaining UCC, up to prior CCA claimed.Worked example
An investor reviewing a Canadian property tags recapture as a diligence item, links it to source documents, and reruns the model if the answer changes purchase price, closing certainty, rent, financing, capex, or exit value.
How investors read it
Use recapture as a decision filter: if it cannot be verified, priced, insured, financed, or managed, the right move is a lower offer, stronger condition, larger reserve, or a walk-away.
Common mistakes
- · Treating a legal, tax, lending, municipal, or operating constraint as a small admin item.
- · Using broker, seller, or contractor assumptions without source documents and date-stamped rules.
- · Ignoring timing, reserves, professional advice, and downside scenarios because the base-case spreadsheet looks good.
Educational Canadian investor content only. Verify current municipal, provincial, federal, lender, insurer, tax, accounting, and legal rules before relying on it in a transaction.