On January 1, 2020 Jorge purchased two newly constructed rental buildings for $350,000 each. Of the total cost of $350,000 for each building, $100,000 represents the value of the land on which the building is situated. One building contains four suites and is rented to students. The other building is rented to a florist business. Each of the buildings is allocated to a separate Class 1. Net rental revenue (before CCA)for 2020 is $30,000. The maximum CCA deduction for 2020 is:
A)$00,000.
B)$37,500.
C)$45,000.
D)$20,000.

Question

Quizplus · Accepted Answer

The maximum CCA deduction for 2020 is $37,500. This is calculated as follows:* The cost of each building is $350,000.* The value of the land on which each building is situated is $100,000.* The depreciable cost of each building is $250,000.* The CCA rate for Class 1 property is 4%.* The maximum CCA deduction for each building is $10,000 (250,000 x 4%).* The maximum CCA deduction for both buildings is $20,000 (10,000 x 2).

On January 1, 2020 Jorge Purchased Two Newly Constructed Rental