22 March 1995 External T.I. 9507375 - 54

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

General - principal residence exemption - land in excess of 1/2 hectare.

Position TAKEN:

Unable to give ruling as a question of fact. However, based on the information provided (copies of pertinent bylaws, and facts given in letter) it is our opinion that the minimum lot size imposed by the municipal bylaws were in effect at the time of the purchase of the property and thus the entire parcel of land in question would qualify for the principal residence exemption given the other requirements of the section are met.

Reasons FOR POSITION TAKEN:

IT-120R4 paragraphs 21 and 22, previous correspondence

		950737
XXXXXXXXXX	D. Zion

March 22, 1995

Dear XXXXXXXXXX:

Re: Principal Residence Designation

We are writing in response to your letter of February 10, 1995, forwarded to us by the XXXXXXXXXX Centre Tax Services office in which you request that we provide a ruling as to whether you would be eligible to claim the principal residence exemption with respect to your residence and the adjoining 3.87 acres of land.

You will note from the enclosed Information Circular 70-6R2 and related special release on the subject of advance income tax rulings that such rulings are given only in respect of proposed transactions. Further, a ruling cannot be provided where the main issue involves a question of fact. Since the determination of how much land can be considered part of a principal residence involves a finding of fact, a ruling cannot be issued. However, we are prepared to provide an opinion based on the facts you have provided to us.

As we understand the situation, your residence is situated on a parcel of land which is 3.87 acres in size. The property was purchased in 1968 and is located in an area which, since 1960, has been zoned "Agricultural Residential" (zone A). You have provided a photocopy of the applicable portions of the pertinent bylaw provisions which indicate that since 1960 the minimum lot size for property used for residential purposes in zone A is 25 acres. Furthermore, you state that since the acquisition date you have maintained the property as a residential property. We have thus assumed that you have never rented the property nor received any other income from it.

Part of paragraph 22 of Interpretation Bulletin IT-120R4 "Principal Residence", as you point out in your letter, states that "A legally imposed minimum lot size, for residential use, exceeding 1/2 hectare that was in effect on the date the property was acquired by the taxpayer, is generally considered to be the minimum amount of land necessary for the use and enjoyment of the housing unit as a residence throughout the period that the property is continuously owned by the taxpayer after that acquisition date". Based on the facts available, we are of the view that the comments in this excerpt from paragraph 22 are applicable to the above scenario where the zoning at the time of acquisition is as described in the documents. Accordingly, it would follow that the entire 3.87 acres in question would qualify for the principal residence exemption assuming it otherwise so qualifies.

We trust these comments will be of assistance to you. Since we are unable to provide you with a binding advance income tax ruling, the fee of $481.50 received with your request will be returned to you under separate cover.

Yours truly,
P.D. Fuoco
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch