Immeubles Zamora – Quebec Court of Appeal confirms that an LP sold a seniors residence shortly after construction to an unsolicited purchaser on income account

Bouchard JCA agreed with the Court of Quebec that two taxpayers , who were each 10% limited partners of a limited partnership that constructed a seniors residence, as well as owning the general partner, realized, as to their 10% shares, gains on income account when, shortly after the facility opened its doors, one of them was approached by a business associate, who asked what was their price, and agreed to purchase for the price that was named.

Bouchard JCA indicated this being an isolated transaction and their not being “flippers” was not decisive, the judge had not erred in noting the complete absence of any business plan or other documentary proof of their lack of motivating intention to sell and that “the judge did not commit a reviewable error … by holding that the appellants had a secondary intention to divest themselves of their project in the event of an interesting offer being made to them.”

Neal Armstrong. Summary of Immeubles Zamora ltée v. Agence du revenu du Québec, 2020 QCCA 894 under s. 9 – capital gain v. profit – real estate.