# Capital Gains Exemption On Acreage



## tygrus (Mar 13, 2012)

If an acreage is your principle residence, are there any rules around what is exempt.

For instance is there a limit on the property size?

What about other buildings on the acreage like a shop or detached garage?

What about secondary buildings or facilities?


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## Just a Guy (Mar 27, 2012)

It's not so much being a principle residence as to what you write off about the property. If you use it for business or farming, things get complicated.


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## OptsyEagle (Nov 29, 2009)

1.25 acres of land can go with the house. Any more land is not a principal residence.


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## Davis (Nov 11, 2014)

What Optsy said.


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## tygrus (Mar 13, 2012)

OptsyEagle said:


> 1.25 acres of land can go with the house. Any more land is not a principal residence.


What about buildings on that land. I can get a home and an adjacent machine shop on 1.25 acres pretty easy. Does the shop qualify.


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## sags (May 15, 2010)

Don't know if it applies in your situation, but there is the capital gains exemption for farmers if the land is sold or bequeathed.

It has it's own rules and criteria.


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## tygrus (Mar 13, 2012)

There is a cut off between exemptions for the farm home as principle residence and the adjoining land base. The farm home exemption is just like a principle residence in the city however, the farm home usually consists of the house and ancillary buildings in close quarters, like a workshop or detached garage. I cant find any information on whether the other buildings are considered part of the residence or not.


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## sags (May 15, 2010)

I know my brother in law severed the home quarter around the farm buildings prior to selling the rest of the farm. If I remember he kept 30 acres and sold the other 130 acres in the home quarter.

I think you might get the best advice from an accountant who deals specifically with farm issues.


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## RCB (Jan 11, 2014)

OptsyEagle said:


> 1.25 acres of land can go with the house. Any more land is not a principal residence.


I'm not certain that is enforced by CRA, perhaps due to the lifetime exemption. I come from a non-farm rural area where most homes were built on a minimum of 10 acre residential lots. No one considers or reports capital gains when selling. In my own family, home sales on 10 acres and 320 acres were reported as principal residences by the accountants preparing my parents' tax returns.


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## tygrus (Mar 13, 2012)

RCB said:


> I'm not certain that is enforced by CRA, perhaps due to the lifetime exemption. I come from a non-farm rural area where most homes were built on a minimum of 10 acre residential lots. No one considers or reports capital gains when selling. In my own family, home sales on 10 acres and 320 acres were reported as principal residences by the accountants preparing my parents' tax returns.



Most farm residences around me have also been subdivided on 10 acres. I think its a rule of the municipality.

I guess I am confused as to all the assets that comprise a farm residence because we have more than just a house in our yard. There are shops which double as a garage and personal storage.

The other thing I found was the definition of primary residence was very loose. It can be things like an mobile home, trailer or house boat which arent even fixed locations.


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## Westerly (Dec 26, 2010)

The 1/2 hectare rule is a guide only. If you have ten acres and the property is clearly not sub dividable with no commercial activity then it is likely 100% PR. The considerations come down to "necessary for the use and enjoyment of your home."
If you have 1/2 acre in downtown Vancouver and it is clearly sub dividable (based on facts of the specific property, or recent developments on neighbouring properties) then capital gains may apply.
The farm exemption applies up to a $750,000 gain (by memory.) If it is indeed farmed property and has been used as such there may be GST issues.

As for other buildings, it depends on their use: Garage that you park your personal use car in, generally part of the PR. Shop that is primarily commercial use - taxable and possibly GST considerations.

If the secondary buildings or facilities are commercial or rental in nature there may be capital gains to report. 

I would discuss the particulars with your acct.


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