GST on sale of principal residence

Tax Topics
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GST registrant sells his 12 acres in MB that includes his house (principal residence) and shop and some sheds. At time of sale the lawyer calculates GST on an agreed portion representing land and buildings. The sheds have generated a small amount of rental income for storage use over the 5 years of ownership. No CCA has ever been claimed on any buildings. The 12 acres was subdivided off of 160 acre parcel before the GST registrant owned the property. My question is, does the fact that GST has been charged on a portion of the sale price mean that there is no way the whole property could be considered a principal residence? Or is a 12 acre property generally too much to be considered wholly principal residence? I know CRA says 0.5 hectares but obviously there are many country acreages that are 2 acres and more and could be considered necessary for the personal use and enjoyment of the individual.

Thanks!

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While the CRA says 0.5 hectares, it is possible that the local rules have imposed a different rules.

The details will depend on the local rules and rulings that are particular to your client’s circumstance. You can check the CRA’s folios on this topic as well as consult with someone familiar with the Excise Tax Act and the local rules. (Note that this would not be a real estate lawyer, since this is a different area of law.)

I would start with CRA’s Folio S1-F3-C2 first.

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GST registrant, makes me think this is a business use property? Maybe farmland, I will look at original purchase agreement to see if it’s consistent.

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