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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
XXXXXXXXXX 2003-003827
September 16, 2003
Dear Sir:
Re: Sale or Transfer of your Principal Residence to your Son
This is in reply to your letter of August 16, 2003 in which you ask for clarification on the rules related to the disposition of property to a person with whom you do not deal at arm's length, such as a child.
When the owner of a property sells a property to a person with whom the owner does not deal at arm's length, paragraph 69(1)(b) of the Income Tax Act will deem the owner to have received proceeds of disposition equal to the fair market value of that property for the purpose of computing the gain on the property for income tax purposes. The attached Interpretation Bulletin IT-405, Inadequate Considerations - Acquisitions and dispositions, provides general comments on this topic.
However, as discussed by telephone with Ms Humenuk on September 15, 2003, any gain realized as a result of the disposition of a principal residence is generally not subject to tax as explained in the attached Interpretation Bulletin IT-120R6, Principal Residence. Note that a resident of Canada who owns only one housing unit which is situated in Canada on land of one-half hectare or less which has been used strictly as the owner's residence since its acquisition will usually not need to refer to paragraphs 14-44 of that bulletin in order to establish that any gain on the disposition of such a residence is exempt from tax under the Income Tax Act.
We hope our comments are helpful.
Yours truly,
T. Murphy
Section Manager
for Division Director
International & Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
Enclosures
??
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2003
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2003
Email this Content