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.
Dear Sirs:
Re: Application of paragraphs 13(7)(b) 13(7)(e) and 48(1)
This is in reply to your letter of September 27, 1991 concerning the application of subparagraphs 13(7)(b) & (e) of the Income Tax Act (the "Act") where a taxpayer after ceasing to be a resident of Canada commences to use his former principal residence as a rental property.
The provisions of subsection 48(1) apply only for purposes of subdivision c of Division B of Part 1 and do not apply to deem either a disposition or acquisition for purposes of subsection 13(7) which is in subdivision b. Consequently a deemed disposition and reacquisition pursuant to subsection 48(1) would not in and by itself trigger the application of paragraph 137)(e) of the Act.
We agree that where the cost to the taxpayer is $100,000 and the fair market value is $300,000 at the time the principal residence is converted to a rental property the taxpayers capital cost pursuant to paragraph 13(7)(b) of the Act would be $250,000."
The foregoing represents our general views with respect to the subject matter of your letter, however, the facts of a particular situation may result in a different conclusion. As indicated, these opinions are not rulings and in accordance with the guidelines set forth in paragraph 21 of Information Circular 70-6R2 they are not binding on the Department.
We trust our comments will be of assistance to you.
Yours truly,
E. Wheeler for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1991
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© Sa Majesté la Reine du Chef du Canada, 1991
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