CRA indicates that no loss can be recognized for damages paid by a purchaser for failure to close a purchase

Where a purchaser defaults on its purchase of a rental property, CRA considers that the damages paid by the purchaser to the vendor cannot be recognized as a capital loss “since the purchaser had not disposed of property as defined in subsection 248(1).” This reasoning would seem to apply to deny any recognition for damages paid for any failure of a purchaser to close any agreement of purchase and sale.

Neal Armstrong. Summary of 7 October 2016 APFF Roundtable, Q.3 under s. 39(1)(b).