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Sophia is a real estate investor. She purchases a quadruplex for 750 000$. She spends several amounts in the year 2018 for the building: Landscaping:

Sophia is a real estate investor. She purchases a quadruplex for 750 000$. She spends several amounts in the year 2018 for the building:

  • Landscaping: 1 000$
  • Roof repairs: 20 000$
  • Bathroom renovations: 7 500$
  • Kitchen renovations: 10 000$
  • Renovation permits: 500$
  • Cable expenses: 500$
  • Electricity expenses: 3 000$
  • Publicity expenses for rental: 3 500$
  • Real estate commission paid on sales : 4 000$

She sells the quadruplex 4 years later for 1 250 000$.

  1. Please explain the difference between a maintenance expense and a capital expense.
  2. Calculate the adjusted cost base on the building and determine what will be the total capital gain on this sale.

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