The property in question will be sold this year. Following is the ownership history. Can the principal residence exemption be claimed for the entire property under “required use & enjoyment”, or can it be a farm deeded to the children. If not where does the capital gain lie.
- A couple had owned a 37 acre parcel since 1968, prior to Valuation Day. Although it is in an area where the minimum lot size is 10 acres, it is landlocked - without legal access, so can’t be subdivided.
- It has been their principal residence since 1978.
- It was in the ALR till 1985.
- 31 acres used as a woodlot, 6.79 acres used for principal residence and accessory buildings.
- In 1992 , through the Small-Scale Forestry Program, they commenced operation of a wood lot, planting, fertilizing and pruning. They commenced selling logs, the income from which was declared as farming income on their Personal taxes in 1994, 1995, 1997, 2000, 2002 & 2003.
- In 2011 they created a bare trust putting three of their offspring on title - so Mum and Dad and three kids on title.
- Dad died in 2015, his chare moving to Mum.
- Mum died last year (2018).
- The remaining trust holders, the three offspring, are now going to sell the property - sale to take place in 2019.