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: Whether the principal residence exemption would apply to the capital gain on the sale of a leasehold interest in a housing unit.
Position: Question of fact.
Reasons: The principal residence exemption may apply when an individual disposes of an interest in a unit of a residential development that consists of a leasehold interest and a share of the corporation that actually owns the development. There are, however, a number of other factors that have to be considered in determining if the exemption would apply to a particular individual.
November 17, 2006
XXXXXXXXXX
Dear XXXXXXXXXX:
I am writing in response to your correspondence received on October 20, 2006, following up on my correspondence to you of the same date, concerning the interest you and other individuals hold in units of a housing development.
I now understand your question to be whether the principal residence exemption would apply to the capital gain that individuals could realize on the sale of the interest they hold in units of the development. I apologize for the misunderstanding in my previous correspondence.
The principal residence exemption may apply when an individual disposes of an interest in a unit of a residential development that consists of a leasehold interest and a share of the corporation that actually owns the development. There are, however, a number of other factors that have to be considered in determining if the exemption would apply to a particular individual. This determination can only be made on a case-by-case basis, with reference to the individual's particular circumstances. I therefore invite you to contact Ms. Valerie Dionne of the Burnaby-Fraser Tax Service Office by calling 0-604-587-2047 collect. Ms. Dionne is aware of our correspondence and will be pleased to assist you.
Thank you again for having taken the time to write and clarify your concerns.
Sincerely,
The Honourable Carol Skelton, P.C., M.P.
Carole Lalonde
613-957-2092
November 6, 2006
2006-021145
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