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.
Principal Issues: Whether the land owned by a taxpayer is considered to be "qualified farm property"?
Position: Question of fact, general comments provided.
Reasons: Question of fact, insufficient facts provided.
2005-013497
XXXXXXXXXX Charles Rafuse
613-957-8967
June 20, 2005
Dear XXXXXXXXXX:
Re: Capital Gains Deduction - "Qualified Farm Property"
We are writing in reply to your letter of June 6, 2005, concerning whether you would be entitled to claim the $500,000 capital gains deduction under subsection 110.6(2) of the Income Tax Act on the future sale of a land.
Specifically, you have indicated that, in 1969, you inherited land from your father that he had farmed for years. In 2004, you had two lots surveyed in anticipation of selling them.
We are assuming that your father had used the land principally in carrying on the business of farming in Canada in at least five years during which he owned the property. If so, you would be eligible to claim a capital gains deduction for the year that you dispose of the land. If not, there are other criteria that could be met that would still qualify you for a capital gains deduction and you should contact your local tax services office for further information.
We trust our comments will be of assistance to you.
Yours truly,
Charles Rafuse
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch
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