An investor sells a rental property for $600,000 that they purchased for $400,000. They claimed $50,000 in depreciation over the years. What is their taxable capital gain?
Correct Answer
A) $100,000
The capital gain is $200,000 ($600,000 - $400,000), but only 50% of capital gains are taxable in Canada, resulting in a taxable capital gain of $100,000. The depreciation claimed creates a separate recapture of depreciation issue that is fully taxable as income.
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