Jane Lee is 82 years old and presently lives in her own house in Toronto, which...

 

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Jane Lee is 82 years old and presently lives in her own house in Toronto, which she has owned and lived in for 40 years. Jane plans to move into a senior's home in February 2021. Jane is not sure whether she will like the senior's home and is planning to move back to her house if she doesn't. Because of this, her daughter, Donna (who is handling Jane's financial affairs) is planning to rent Jane's home for a few years before arranging for Jane to sells it. Jane has never owned any other residential property. The house is on a large two-acre lot. It cost Jane $36,000 when she bought it and it is worth $2.4 million now. Prior to advertising for a tenant to move in in March, Donna has decided to hire people to clean and paint the house, replace the flooring in the kitchen (the new flooring is similar to the old floor), repair the front steps and buy a more modern stove to replace the old stove in the kitchen. This will cost a total of $7,000 including HST: Cleaning Painting New flooring Repairs to porch Modern stove $200 5,300 600 400 500 Donna estimates that Jane's net rental income after expenses (before the $7,000 of expenditures above) will be $10,000 ($1,000 a month) for 2021. Required: Estimate Jane's minimum 2021 rental income, indicating why or why not each of the $7,000 of expenditures can be deducted. Show all calculations, noting the amount of CCA that can be claimed. Indicate (with reasons) what elections, if any, should be filed with Jane's 2021 tax return. Jane Lee is 82 years old and presently lives in her own house in Toronto, which she has owned and lived in for 40 years. Jane plans to move into a senior's home in February 2021. Jane is not sure whether she will like the senior's home and is planning to move back to her house if she doesn't. Because of this, her daughter, Donna (who is handling Jane's financial affairs) is planning to rent Jane's home for a few years before arranging for Jane to sells it. Jane has never owned any other residential property. The house is on a large two-acre lot. It cost Jane $36,000 when she bought it and it is worth $2.4 million now. Prior to advertising for a tenant to move in in March, Donna has decided to hire people to clean and paint the house, replace the flooring in the kitchen (the new flooring is similar to the old floor), repair the front steps and buy a more modern stove to replace the old stove in the kitchen. This will cost a total of $7,000 including HST: Cleaning Painting New flooring Repairs to porch Modern stove $200 5,300 600 400 500 Donna estimates that Jane's net rental income after expenses (before the $7,000 of expenditures above) will be $10,000 ($1,000 a month) for 2021. Required: Estimate Jane's minimum 2021 rental income, indicating why or why not each of the $7,000 of expenditures can be deducted. Show all calculations, noting the amount of CCA that can be claimed. Indicate (with reasons) what elections, if any, should be filed with Jane's 2021 tax return.

Answer rating: 100% (QA)

Solution To estimate Janes minimum 2021 rental income we need to calculate her total rental income a... View the full answer