16 April 1993 Income Tax Severed Letter 9307025 - Rental Use Convert to Principal Residence — Years Available for Designation

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.

                                                    930702
XXXXXXXXXX                                          A. Humenuk
                                                    (613) 957-2134

April 16, 1993

Dear XXXXXXXXXX Re: Principal Residence Designation

We are replying to your letter of March 8, 1993 concerning your ability to designate a particular property as your principal residence.

We cannot confirm your ability to designate your property as a principal residence for a particular period of time since there are many factors which may change prior to the disposition of that residence which must be considered in determining whether the property can be so designated. We offer the following general comments on the income tax implications of your enquiry. Please note that the attached Interpretation Bulletin IT-120R4 "Principal Residence" contains many limitations not described in this letter which may or may not be applicable in determining whether you are entitled to designate your property as a principal residence for any particular taxation year.

The relevant facts in your situation are as follows:

                          XXXXXXXXXX

You have asked whether you can declare the property to be your principal residence effective for 1993 since the reason you have not yet occupied it is beyond your control.

Our Comments

Paragraph 35 of the attached Interpretation Bulletin IT-120R4 "Principal Residence" describes an example very similar to the situation you described. Note however that the exception to the four year limit described in paragraph 33 can also apply to the conversion of an income producing property to a principal residence where the reason the individual did not inhabit the residence was as a consequence of the relocation of the individual's or the individual's spouse's employment and

3. the property is subsequently inhabited by the individual during the term of that employment,

4. the property is subsequently inhabited by the individual before the end of the taxation year following the taxation year in which that employment was terminated or

5. the individual dies during that term of employment.

In conclusion, it is possible that you will be able to designate your XXXXXXXXXX property as a principal residence for all the taxation years in question provided that you make the election under subsection 45(3) when the property is converted to a principal residence, you occupy the residence within the appropriate time frames and there are no other factors which would prevent you from so designating that particular property.

We trust our comments will be of assistance to you.

Yours truly,

J.A. Szeszycki for Director Business and General Division Rulings Directorate Legislative and Intergovernmental Affairs Branch