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Level 2
posted Oct 30, 2019 6:24:42 AM

Does a change of property use from rental to recreational cottage necessarily trigger a "deemed disposition" and therefore potential capital gain?

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1 Best answer
New Member
Oct 30, 2019 6:24:43 AM

Unfortunately, yes.  This is a deemed disposition.

https://www.taxtips.ca/personaltax/propertyrental/changeinuse.htm

6 Replies
New Member
Oct 30, 2019 6:24:43 AM

Unfortunately, yes.  This is a deemed disposition.

https://www.taxtips.ca/personaltax/propertyrental/changeinuse.htm

Level 2
Oct 30, 2019 6:24:45 AM

I understand and I am not surprised, but the email I received from "TurboTax AnswerXchange" stated "As it doesn't change its status in regards to being a principal residence, it isn't a deemed disposition.  If and when you do sell the cottage, at that point what you sell it for is compared to what you originally purchased it for to determine the capital gain."
So now I'm a little confused... Which is the correct answer?

New Member
Oct 30, 2019 6:24:46 AM

Hey thanks for this Jeffrey...that link makes it very clear.  This will suck paying the tax...but at least I won't be filing wrong.

New Member
Oct 30, 2019 6:24:47 AM

This is the correct answer.   I have provided a link that helps explain.

New Member
Oct 30, 2019 6:24:49 AM

And you are welcome Stan

Level 2
Oct 30, 2019 6:24:50 AM

Yes, thanks Jeffrey for clarifying.