If a client Elect under subsection 45 (3) to not have the deemed disposition provision of subsection 45 (1) apply “ in respect of a complete change in use of an Income -producing property to a principal residence, are we required to show all calculation of capital gain of the “ deemed to have disposed of the Property” and complete the Schedule 3 in his tax return of that year OR just we need to submit a form of election 45 (3) and no need to prepare schedule 3 in that year’s tax return?
I wonder, if in case, we are required to complete Schedule 3 and report on T2019 of that "Deemed to have disposed of the Property” how the tax on capital gain will be differed and stopped not to be included in the total income of that year’s tax return as I do not see any available option in T2091 or Schedule 3 to request not to include the capital gain in the total income. I shall appreciate if someone guides me on this matter. Thanks.
Don’t put anything on S3. Don’t include a T2091 - that’s only used when you dispose of a principal residence, and you stated that up to this point the property had NOT been a principal residence. Include the required letter if you are filing a paper return, or submit the letter electronically if E-filing the T1.