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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