question archive Jim Smith owns a rental property which had a UCC of $85,000 at the beginning of 20x0
Jim Smith owns a rental property which had a UCC of $85,000 at the beginning of 20x0
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Jim Smith owns a rental property which had a UCC of $85,000 at the beginning of 20x0. After all allowable expenses other than CCA, Jim's total rental income was $1,000 in 20x0 and $10,000 in 20x1. Jim always deducts the maximum CCA allowed. What is the UCC for his rental property at the end of 20x1? (The property is a Class 1 building amortized at 4%.)
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Answer: 80,640
Calculation
| 20X0 | |
| UCC at beginning of 20X0 | 85,000 |
| CCA | -1,000 |
| UCC at end of 20X0 | 84,000 |
| 20X1 | |
| UCC at beginning of 20X1 | 84,000 |
| CCA | -3,360 |
| UCC | 80,640 |
CCA calculation :
20X0 = 85000*0.04*0.5 = 1,700, which is restricted to $1000 rental income
20X1 = 84,000*0.04 = 3,360 which is less than rental income of $10,000.
