Ch. 13 - Capital Gains/Losses (Special Rules 1)

Question 1

Principal residence exemption

• what is a PR
• limitation
• Formula

Answer 1

• includes a housing unit that must have been ordinarily inhabited at some time during the year
• limited to the building and half a hectare of land (unless the taxpayer can prove the land is necessary to the use and enjoyment)
• (1 + years designated) / years property was owned (each part year counts as a full year)

Question 2

Principal residence exemption - change in use

• personal to income
• income to personal

Answer 2

• have 4 years to designate the rented portion as PRE if no CCA has been taken
• if acquired to rent, and changed to PRE, there would be a capital gain unless an election is made and CVA has not been claimed

Question 3

Personal use property

• tax consequences
• special cost/proceeds rule

Answer 3

• 1/2 of gain is taxable and losses are denied

- 1. cost is deemed to be greater of $1,000 and original, and 2. proceeds are deemed to be greater of actual and $1,000

Question 4

Listed personal property

• includes
• tax consequences
• Special cost/proceeds rule

Answer 4

• PUP that does not depreciate over time (art, jewellery, stamps)
• 1/2 of gain is taxable, losses can be deducted against other LPP losses, losses can be carried back 3 or forward 7
• 1. cost is deemed greater of actual and $1,000, and 2. proceeds is deemed greater of actual and $1,000

Question 5

What is personal use property

Answer 5

Property used primarily for the taxpayers use and enjoyment