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Video instructions and help with filling out and completing Who Form 4797 Allowance

Instructions and Help about Who Form 4797 Allowance

Hi there I'm Peter Russell from super tacks welcome to another one of my video blogs today's discussion is a walkthrough of an example of a capital gain upon disposition of a rental property here in Canada now essentially individuals get involved with rental properties to earn rental income and eventually earn a capital gain upon disposition of that rental property now net rental income is generally your rental revenue earned less rental expenses rental expenses such as property taxes paid mortgage interest paid utilities and repairs and maintenance those are the general ones you're going to come across now you can also take what is called CCA or capital cost allowance that is basically the write-off of the cost of your rental property over time now how we do this is we set up the asset in what is called a class now rental properties are generally put in class one for tax purposes here in Canada class one means that your decline you are you are writing off the asset at a declining rate of 4% per year now here in Canada we have something called the half-year rule which means you only take half deceased half of the depreciation in the first year that you generally would so in this example if our rental property had a value of $300,000 and we take 2 percent the first year and then 4 percent on the 300,000 less 2% for the second year I'm going to show you how this works in my example because this this will help explain to you a topic which is called recapture which is involved in the calculation of the capital gain of a rental property now let's go visit my big board here where we have an example gains on rental properties...