An Alberta investor who owns several rental buildings has combined net rental income of $18,000 for the year before capital cost allowance, and $30,000 of CCA available on those buildings. How much CCA can the investor deduct this year?
Correct Answer
C) $18,000
Section 1100(11) of the Income Tax Regulations limits the CCA a taxpayer may claim on rental property to the taxpayer's net income from renting those properties, computed before CCA, so CCA cannot create or increase a rental loss. The investor may deduct $18,000, bringing net rental income to zero; the remaining $12,000 is not claimed this year.
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