If a duplex was a single property, the election of February 22, 1994 respecting the elimination of the $100,000 capital gains exemption would be engaged by a disposition of the unit occupied by the owner, thereby forcing the making of a decision as to whether to designate the residence as a principal residence, to the detriment of such a designation for the individual’s chalet. Where an individual owning a triplex occupies 40% of it, can the related land give rise to an allowable capital loss? How does the February 22, 1994 election apply in such a case? CRA responded:
[A] building and the land on which the building is located are a single property under the private law applicable in Québec.
[Reg.] 1102(2)…applies only for the purposes of calculating capital cost allowance, and recapture or terminal loss.
Consequently, where a taxpayer realizes a capital loss on the disposition of a property comprising a building and the land upon which it is situated, subparagraph 40(2)(g)(iii) effectively denies the loss only if the property is a PUP under section 54. …
Regarding the February 22, 1994 election, the CRA still considers as valid the form, Election to Report a Capital Gain on Property Owned at the End February 22, 1994, filed by a taxpayer in accordance with the instructions and information available at that time.