Documents to calculate CCA on rental property - From

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Hi David,
Will the statement of adjustments (provided by my notary) have the information needed to calculate CCA on a rental property?   And the eventual capital gains when it's sold?
thanks,
GXXXX.
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david ingram replies:
It is a start.  We (or you) add the total sale price plus to the notary fees plus property purchase tax and other closing costs (but not adjustments for taxes or oil in  fuel tank, etc., which are operating costs).  this new figure is then usually adjusted by prorating that purchase price by the municipal assessment to get the actual building cost according to what you paid for it.
As an example, if you bought a condo for $97,000 and all the closing costs were exactly $3,000, your actual capital cost of the condo would be $100,000.  If the municipal assessment was $20,000 land and $60,000 building, the appraisal %age would indicate tha the building value is 3/4's (60,000 / 80,000) of the purchase price of $100,000 or $75,000.  
You would (or could if there was a positive cash flow) than claim CCA (capital cost allowance or depreciation) of up to 2% of the $75,000 in the first year and up to 4% per year thereafter of the remaining balance. 
This is different than the American method which takes depreciation on a Straight line basis of the original balance.
Hope this helps and good luck at your Ozzie Jurock's Real Estate Action Group. (see www.jurock.com for information about joining an active Real Estate Investment Club - Click on [Real Estate Action Group] at the top right of the page.
(For the benfit of the reader, this client actually had his return submitted with a glaring error on it caused by a genuine bug in our tax preparation software - we caught it before the assessemnt and warned him but it just goes to show that bwtween my Baht to the US dollar booboo and this as the next email, that I am not perfect - Always make sure that you have double checked anything you read here or in a newspaper or heard on CNN).   
David Ingram of the CEN-TA REALTY  Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 980-0321 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
Be ALERT,  the world needs more "lerts"
 
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