Question

Ms. Julia Fenwick purchased a triplex on February 07, 2018 for a total cost of $ 995,000. Of this amount, it is estimated that $ 275,000 should be allocated to the land on which the building was located. The three rental units in the triplex are identical in size and features and, for purposes of allocation to a CCA class, the property is considered to be a single unit.

On February 13, 2018, Ms. Julia Fenwick purchased furniture and appliances for one of the units at a total cost of $ 18,000.

Early in March, 2018, all three units were rented. For 2018, Ms. Julia Fenwick’s triplex generated rents of $ 70,000 and incurred expenses, other than CCA, of $ 18,000.

In August, 2019, the tenants in the furnished unit moved out and purchased all the furniture and appliances from Ms. Julia Fenwick for $ 11,000. For 2019, Ms. Julia Fenwick’s triplex generated rents of $ 43,000 and incurred expenses, other than CCA, of $ 29,000.

Ms. Julia Fenwick claimed the maximum CCA allowable in both years.

Required: Calculate the Net Rental Income 2018 and 2019. Also, determine the UCC balances on January 1, 2020. Include in your solution any tax consequences associated with the sale of the furniture and appliances.

Answer 1

Name:MS.Julia,

Status:Resident

Particulars 2018 2019

Rental income $70000 $43000

Less :expenses other than CCA $18000 $29000

(a) $52000 $14000

Less: CCA (see note below) (b) $29056 $29495

Net rental income/(loss) {(a)-(b)} (c)    $22944 ($15495)

loss on sale of furniture (capital loss) (d) ----- ($2094)

Notes

*calculation of CCA    2018    2019

Triplex:720000*4%*328/365=25880 Triplex :694120*4%= 27765

   Furniture:18000*20%*322/365=3176 Furniture:14824*20%*7/12=1730

UCC on 1 Jan 2020 :

Triplex:$666355 ,no UCC for Furniture as it was sold

*Land is not eligible for CCA*loss on sale of furniture $13094-$11000