ACB of Leaky Condo

QUESTION: Have owned a rental condo since 1994 purchased for 120K and have just sold it for 186K.
> It went through a building envelope repair at a cost of 45K. I managed to write of 100% in 2005.
> Can you advise if I can add the 45k to calculate the ACB even though I have written this expense off?
> There has been no CCA on the unit since purchase. I am rolling the proceeds into another property
> (bare land) that I hope to develop and live in within 5 years. Anything I can do to negate or at least
> somewhat mitigate the tax consequences?
> I assume I would pay tax on 50% of the profit? (taxed on 30k?) Thanks.
> ____________________________________________________

david ingram replies:

If you wrote the $45,000 off as a rental expense you received two times the benefit because you received a deduction for the entire $45,000.

Used to increase the ACB (adjusted cost base) of the unit would only have resulted in a deduction of 1/2 or $22,500 because Canada only taxes one-half of a capital gain.

There is no rollover of capital gains allowed in Canada at this time for rental properties and it would not apply when you sell a condo for vacant land. Capital gains rollover provisions DO exist for the sale of business properties or for expropriated land.