Sara Shimizu is the owner of two rental properties, 509 Brunswick Avenue and 356 Spadina Road. These properties were purchased six years ago for $525,000 and $600,000, respectively. In 2012, 509 Brunswick Avenue was sold for $550,000. A reasonable allocation of this amount is considered to be 75% to the building and 25% to the land. The following income and expenses were incurred in renting out the two properties in 2012:
Rental$ 60,000
Interest on mortgage(40,000)
Operating costs(15,000)
Promotion costs for sale of property (5,000)
Net income0
There are no meal or entertainment expenses included in the $5,000 of sales promotion costs. At December 31, 2011, the undepreciated capital cost of 509 Brunswick Avenue was $383,500 and that of 356 Spadina Road was $400,000.
REQUIRED
Determine the income from property for income tax purposes assuming Sara wishes to report the least amount possible for tax purposes in 2012.