Saul owns two residential rental properties at the beginning of the year. Both properties are in separate CCA classes: Property A is in Class 1 with a maximum CCA rate of 4%, while Property B is in Class 3 with a CCA rate of 5%. At the beginning of the year, Property A has a UCC balance of $1,500,000 and Property B has a UCC balance of $500,000.Part way through the year, Saul replaces Property B for a new property, PropertyC. The sale of PropertyB results in CCA recapture of $25,000. Property C has a capital cost of $400,000 of which $100,000 is allocated to the land. The gross rental income and rental expense for each property for the year are as follows:

Property A

Property B

Property C

Total

Gross Rental Income

$150,000

$50,000

$30,000

$230,000

Rental Expenses

-$90,000

-$77,000

-$25,000

-$192,000

$60,000

-$27,000

$5,000

$38,000

What is the maximum amount of CCA that Saul would be allowed to deduct in calculating his net rental income for the current year?

A.$5,000.

B.$78,000.

C.$38,000.

D.$13,000.

E.$63,000.

F.$60,000.

G.Nil - no CCA can be deducted on rental properties.

H.$12,000.