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.
Principal Issues:
The issue is whether land in excess of 1/2 hectare qualifies for the principal residence exemption.
Position TAKEN:
Comments of a general nature were provided.
Reasons FOR POSITION TAKEN:
Insufficient information was provided.
942470
XXXXXXXXXX M. Eisner
November 24, 1994
Dear Sirs:
Re: Principal Residence Exemption
This is in reply to your letter of September 22, 1994 in which you requested that we consider a situation involving the disposition of a residence.
As previously indicated to you in a telephone conversation, it is not possible to issue an advance income tax ruling on your situation. In addition, we are not able to discuss a specific situation involving your parents without a letter from them authorizing you to act as their representative. However, we have proceeded to provide you with general comments which, we hope, will be of assistance to you.
For your general information, we have enclosed a copy of the 1993 Capital Gains Guide which includes comments concerning the disposition of a principal residence.
Where a housing unit is situated on a large area of land, the land in excess of 1/2 hectare will only qualify as being part of a principal residence to the extent that the individual establishes that it was clearly necessary in order for the housing unit to properly fulfil its function as a residence and not simply be desirable. Land in excess of 1/2 hectare could be necessary where the size or character of a housing unit together with its location on the lot makes excess land essential to its use or enjoyment as a residence. In addition, land in excess of 1/2 acre could be necessary where the location of a housing unit requires excess land in order to provide the taxpayer with access to and from public roads. Another consideration which may be relevant in determining whether land in excess of 1/2 hectare is necessary for the use and enjoyment of the housing unit as a residence are subdivision restrictions and minimum lot sizes. In all cases, however, it is a question of fact as to how much, if any, of the excess land is necessary for the use and enjoyment of the housing unit as a residence.
Where a portion of the land does not qualify for the principal residence exemption, it will be subject to the capital gains provisions at the time of disposition. In this regard, we also refer you to the "Fact Sheet" which sets out information on the $100,000 capital gains exemption.
As the above issues on the principal residence exemption are dependent on the facts particular to each situation, we suggest you contact Mr. R.G. Burke, Acting Assistant Director, Client Assistance at the Calgary District Taxation Office. Mr. Burke can be reached by calling 1-403-691-6873. Upon a review of all the pertinent details and documentation, they will be in a position to provide you with a more definite response. We also note that if the issue of subdivision restrictions or minimum lot sizes is to be considered, the details of the restrictions and zoning should be provided.
As indicated earlier, if you plan to represent your parents with respect to the tax consequences of the disposition of their principal residence, an authorization from your parents in this regard should accompany your submission to the Calgary District Taxation Office.
We regret that we could not have been of more assistance at this time.
Yours truly,
J.A. Szeszycki
for Director
Business and General Division
Rulings Directorate
Policy and Legislation
c.c.Mr. G. Burke
Calgary District Office
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© Her Majesty the Queen in Right of Canada, 1994
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© Sa Majesté la Reine du Chef du Canada, 1994
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