I have an elderly client that wants to sever part of her property as it is getting to much to handle. She owns 1.5 hectares and is severing .8 of that. What is the tax treatment of that sale on her tax return? It is just grass, she will have no interest in the lot once sold.
Thank you
Schedule 3 - Section 4
Presumably it’s just a disposition of capital property, subject to capital gains (Proceeds - ACB - outlays)
Principal residence is generally limited to 1/2 hectare in cases where excess land can be severed and sold.
You likely need to allocate a portion of her initial purchase price to the land in order to give you a figure for ACB of the 0.8 acres. If the property was purchased prior to 1971 then you would use a December 31, 1971 value of the land to calculate ACB.
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Thank you.