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.
XXXXXXXXXX
931599
Attention: XXXXXXXXXX
January 14, 1994
Dear XXXXXXXXXX
RE: Land Necessary for use of Housing Unit as a Principal Residence
We are replying to your letter of May 27, 1993 concerning the designation of a particular property as a principal residence where the total area of land connected with the property exceeds one half hectare. We apologize for the delay in our response.
As we understand the facts relating to the property in question,
XXXXXXXXXX
XXXXXXXXXX
It is a question of fact as to how much land is necessary for the use and enjoyment of a residence which can only be determined upon a review of all the relevant facts and circumstances. Thus we are unable to give you a definitive answer in respect of the particular property with which you are concerned. If you require further assistance with respect to the specific property, please submit all the relevant details and supporting documentation to the district office for their review. Nevertheless, we offer the following comments which may assist you in your determination.
The comments in paragraph 22 of Interpretation Bulletin IT-120R4 "Principal Residence" are derived in part from the decision rendered in the Yates case (83 DTC 5158) by the Federal Court - Trial Division and affirmed by the Federal Court of Appeal (86 DTC 6296). The principle that evolved from that decision was that where a conveyance of residential property takes place in areas in which minimum lot sizes are imposed by municipal bylaws or provincial legislation in force at the time the property is acquired, the minimum residential parcel is considered to be the minimum amount that would be necessary for the use and enjoyment of the residence throughout the period that the property is continuously owned.
Thus, there is no time limit for disposing of the land in excess of 1/2 hectare after the severance restriction is lifted in order to preserve the principal residence exemption available on the entire property.
Where it is established that a residential property in excess of 1/2 hectare could not have been acquired for use as a principal residence without the land in excess of 1/2 hectare, the entire property will qualify for the principal residence exemption even though a portion thereof is sold separately several years after the severance restrictions have been lifted.
We trust our comments will be of assistance to you.
Yours truly,
P.D. Fuocofor DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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