Ahmed owned a rental property in Toronto for several years. The property cost $500,000, with $150,000 allocated to the land and $350,000 for the building. It was put up for sale at the end of 2018 and was sold in July 2019 for $650,000, with $175,000 allocated to the land. The UCC balance on December 31, 2018, was $322,000. In anticipation of the sale, the tenant had moved out on December 31, 2018, and the property had been vacant until it was sold.

Ahmed used the proceeds of the sale to purchase another residential rental property in Halifax on August 1, 2019. He does not want to defer any gains or recapture. Ahmed gave you the following income and expenses for this property for the year, along with its cost:

Rental income $30,000

Total expenses 36,000

The total cost of property 480,000

A portion of cost allocated to land 80,000

Ahmed also advises you that he sold a piece of vacant land at a significant loss this year. He had planned to build a rental property on the land but learned after purchasing it that it was highly polluted. The cost of this land was $200,000, and it was sold for $30,000 in 2019.

Calculate Ahmed’s rental income and any taxable capital gains and allowable capital losses from the sale of the real estate properties that he sold during 2019

Answer rating: 100% (QA)

The rental income and taxable capital gains and allowable cap... View the full answer