Before indicating that, if a duplex property is used more than 50% for rental use, so that it is not personal-use property, a capital loss realized on a sale of the property and relating to all of the non-depreciable component can be recognized (subject to s. 13(21.1)) as a capital loss notwithstanding its partial personal use, CRA stated:
[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)… constitutes an exception to this rule in the tax context, but only for the purposes of certain provisions of the Income Tax Act. Indeed, subsection 1102(2) I.T.R. provides that the classes of property described in Schedule II shall be deemed not to include the land upon which a property described therein was constructed or is situated. Subject to subsection 13(21.1) of the Act, this provision, however, applies only for the purposes of calculating capital cost allowance, and recapture or terminal loss.