Partial Capital Gains Exemption

Forum|Forum|3 years ago
April 12, 2023
1 reply
8 views

Client owned property for 12 years, can only claim principal residence for the last 8 years. Since most of the capital gains incurred over the last few years, is it acceptable to adjust the 2015 return (8 years ago) to claim a deemed disposition (for change of use) using an opinion of value for that time?

Or is the only acceptable way to use the exemption formula which effectively assumes straight line capital gain appreciation.

ProFile (Canada)

This topic has been closed for replies.

J

janisbossenberry

Level 7

Unless you claimed an exemption from the change in use rules by filing an election under ITA 45(2), then the property was deemed to have been disposed of at the time of the change in use. ITA 45(1) deems the change in use to have occurred at FMV. If you did make the election under ITA 45(2) then you would have to look to see if you could rescind it retroactively. I do not think they would accept that.

Did you put the building on the CCA schedule for the rental? If you did, did you use the FMV at the time of the change in use?

R

RN93Author

Level 2

The change in use went from 2nd home (non-income producing) to principal residence (they sold another property in 2015 that they claimed the principal residence exemption). The client sold the subject property last year. Would I be able to claim 45 (2) election with the 2022 return and obtain an opinion of value for the property as of 2015 to calculate the applicable capital gains? Then override Profile to not calculate a capital gain using the principal residence exemption formula?

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