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: Can a property with two buildings on it be partitioned so that each former co-owner receives one building?
Position: No.
Reasons: The buildings are separate properties, and are not being partitioned.
-----Original Message-----
From: Jolie, Phil
Sent: August 8, 2005 4:10 PM
To: XXXXXXXXXX
Subject: Subsections 248(20) and (21) -- partition of land with two buildings on it
This is in reply to your fax of August 3, concerning the hypothetical partition of land with two buildings on it, such that each former co-owner held land and a building of equal total value. You asked if subsection 248(21) would apply to the partition.
My first impression would be that it would not apply. The land and two buildings are each a property. The buildings are not being partitioned. Although 248(21) might apply to the land, each co-owner would have a taxable disposition of a part-interest in one building.
It may be possible to partition a building -- for instance, two people who own an apartment building could turn it into condominiums and each take half the units -- but the example you describe does not result in such a partition. It is difficult to visualize a situation where both the land and the buildings are partitioned.
Thank you for an interesting question. If you would like to provide further comments, I would be interested in hearing them. I could not find any other material in our data banks that deals with land and buildings in this context.
Phil Jolie
Director/Directeur
Business and Partnerships Division/Division des entreprises et des sociétés de personnes
Income Tax Rulings Directorate/Direction des décisions en impôt
613 957-2098
phil.jolie@ccra-adrc.gc.ca
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