12 June 2000 External T.I. 2000-0015355 - GAIN ON SEVERED PROPERTY

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:

Who should report a capital gain on a particular property?

Position TAKEN:

Based on the facts and transactions submitted, we are not in a position to provide any comments. Accordingly, various interpretation bulletins, which may be relevant, were sent to the taxpayer for her information.

Reasons FOR POSITION TAKEN:

The facts and transactions provided to us are unclear and incomplete. In addition, the request is more in the nature of tax consultation, and the CCRA does not provide tax planning advice.

XXXXXXXXXX 2000-001535
M. Azzi
June 12, 2000

Dear Madam:

Re: Capital Gain on a Lot

This is in reply to your letter which was forwarded to us on March 20, 2000 by the XXXXXXXXXX Tax Services Office, wherein you request our views on who should report a capital gain on a property. You describe a situation where real property, which was owned by you and your husband, has been (or is being) severed into two lots and has been transferred to your son. However, you further indicate that subsequent to the transfer you received a final certification form (from the municipal authorities, we assume) indicating that you and your husband still own the property, that you have two years to carry out the transaction, and you indicate that it is unclear to which transaction the form is referring.

Our Comments

Please note that it appears that your request is more in the nature of tax consultation, and that the Canada Customs and Revenue Agency does not provide tax planning advice. Accordingly, in light of the complexity of the tax issues involved in the above situation, you may wish to consider consulting with a tax advisor. Written confirmation of the tax implications inherent in particular transactions is given by this directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R3 (copy enclosed), dated December 30, 1996. Where the particular transactions are completed, the enquiry should be addressed to the relevant tax services office. We would also note that the facts and transactions described in your letter are unclear and incomplete, such that we would nonetheless not be in a position to provide you with any definite answers. For instance, based on the information provided, it is unclear who owns the above-noted property, whether it is a principal residence (or an investment property), whether there has been any change in use in the property, whether there are any attribution issues, which gain you are referring to (i.e., from which transaction(s)), and whether the gain would be on account of capital or income. However, for your information, we have enclosed a copy of various interpretation bulletins which may be relevant to your situation and, accordingly, may be of assistance. They are, IT-120R5, Principal Residence, IT-218R, Profits, Capital Gains and Losses from the Sale of Real Estate, Including Farmland and Inherited Land and Conversion of Real Estate from Capital Property to Inventory and Vice Versa, IT-405, Inadequate Considerations - Acquisitions and Dispositions, and IT-437R, Ownership of Property (Principal Residence).

We regret that we could not be of greater assistance.

Yours truly,

Jim Wilson
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch

??

- 2 -