CRA confirms that the s. 40(2)(g) formula can be prejudicial where there is delayed home construction on vacant land

An individual held vacant land from 1990 to 1999 and then occupied a new home constructed thereon as the individual’s principal residence from 2000 to the property’s sale in 2020.

CRA confirmed that even if most of the appreciation in the property occurred after 2000, the effect of the formula in s. 40(2)(b) is to apportion the gain on a straight-line basis – it has no discretion to apportion the gain based on the value in 2000.

Neal Armstrong. Summary of 8 October 2021 APFF Roundtable, Q.15 under s. 40(2)(g).