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: Whether a mobile home park considered a "former business property"
Position: Question of fact. Ordinarily no.
Reasons: Fees for use of mobile home park pads ordinarily considered rent.
980769
XXXXXXXXXX Wm. P. Guglich
Attention: XXXXXXXXXX
April 8, 1998
Dear Sirs:
Re: Mobile Home Park as Former Business Property
This is in reply to your letter of March 20, 1998, wherein you requested our views as to whether a mobile home park could qualify as a "former business property" for purposes of paragraph 44(1)(b) of the Income Tax Act (the "Act"). You briefly describe the main activity to be the ownership and operation of a 116 pad mobile home park.
"Former business property" is defined in subsection 248(1) of the Act to mean a capital property that was used by the taxpayer or a person related to the taxpayer primarily for the purpose of gaining or producing income from a business, and that was real property of the taxpayer or an interest of the taxpayer in real property. Excluded from the definition of "former business property" is:
(a) rental property of the taxpayer,
(b) land subjacent to a rental property of the taxpayer,
(c) land contiguous to the subjacent land referred to in (b) above that is a parking area, driveway, yard or garden that is otherwise necessary for the use of the rental property, or
(d) a leasehold interest in any property described in (a) to (c) above.
"Rental property" is defined as real property owned, whether jointly or otherwise, by the taxpayer and used by the taxpayer principally for the purpose of gaining or producing gross revenue that is rent.
For further comments regarding "former business property" and "rental property" please refer to paragraphs 1 through 4 of Interpretation Bulletin IT-491 ("Former Business Property").
In any specific case the determination as to whether a particular property would qualify as a "former business property" can only be made after all the relevant facts and details have been established and reviewed. However, fees received for the use of mobile home park pads would ordinarily be considered rent.
We trust our comments will be of assistance to you.
Yours truly,
P. Spice
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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.../cont'd
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