Determine the maximum CCA that is available for 2019. In addition, determine Mr. Bodvin’s minimum net rental income for the year.

Alex Bodvin acquires a residential rental property on June 1, 2019, at a total cost of $423,000. Of this total, $132,000 can be allocated to the value of the land. He immediately spends $42,000 to make major improvements to the property. Rents for the year total $32,000, while rental expenses other than CCA total $27,500. This is the only rental property owned by Mr. Bodvin. Determine the maximum CCA that is available for 2019. In addition, determine Mr. Bodvin’s minimum net rental income for the year.

Expert Solution

Net rental income for Mr. Bodvin will be calculated as follows:

Rents $32,000

Rental Expenses Other Than CCA ( 27,500)

Rental Income Before CCA $ 4,500

CCA (See Note) ( 4,500)

Net Rental Income Nil

Note: Maximum CCA would be $19,980 [(150%)(4%)($423,000 - $132,000 + $42,000)].

However, the maximum CCA that he can deduct will be limited to his net rental income before CCA of $4,500.

The maximum CCA that is available for 2019 is $4,500. Net rental income for Mr. Bodvin will be $0.

Renze Joy Candido answered 2 years ago

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