Saul owns two residential rental properties at the beginning of the year. Both properties are...
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Accounting
Saul owns two residential rental properties at the beginning of the year. Both properties are in separate CCA classes: Property A is in Class 1 with a maximum CCA rate of 4%, while Property B is in Class 3 with a CCA rate of 5%. At the beginning of the year, Property A has a UCC balance of $1,500,000 and Property B has a UCC balance of $500,000. Part way through the year, Saul replaces Property B for a new property, Property C. The sale of Property B results in CCA recapture of $25,000. Property C has a capital cost of $400,000 of which $100,000 is allocated to the land. The gross rental income and rental expense for each property for the year are as follows:
|
| Property A | Property B | Property C | Total |
| Gross Rental Income | $150,000 | $50,000 | $30,000 | $230,000 |
| Rental Expenses | -$90,000 | -$77,000 | -$25,000 | -$192,000 |
|
| $60,000 | -$27,000 | $5,000 | $38,000 |
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