Does demolishing a rental building instead of selling it let me claim a terminal loss?

It can, in the right circumstances. Demolishing a building is treated as a form of disposition for CCA purposes, and if it's the last property in its CCA class and there's no meaningful proceeds of disposition to offset the remaining undepreciated capital cost, the leftover UCC balance can become a terminal loss, similar to what happens when a property is sold for less than its tax value.

CRA has specific rules addressing what happens to a building's CCA class balance on demolition, since there's no sale price the way there normally would be - the analysis looks at what, if anything, was recovered, such as salvage value or land value retained, and applies that against the remaining UCC. Because demolition cases involve their own particular mechanics rather than a straightforward sale, and because getting the class balance and disposition value wrong can affect whether a real loss is actually available, this is an area where the specific facts of the demolition - permits, timing, and what was recovered - genuinely matter and are worth having properly documented and reviewed before you count on the loss being available.