Can a taxpayer make the s. 45(3) election where the taxpayer inhabited as a principal residence a unit of a taxpayer-owned duplex and integrates that unit, through major renovations, with the other unit in the duplex that was, before those renovations, rented to third parties? After noting that “An immovable is normally considered to be a single property unless it is legally subdivided into two or more separate properties,” so that in this situation the partial change-in-use rule in s. 45(1)(c) would be considered to apply, CRA stated:
As indicated in paragraph 30 of Interpretation Bulletin IT-120R6, Principal Residence, a taxpayer cannot make an election under subsection 45(3) where the change in use of a property is a partial change in use. The election in subsection 45(3) cannot be made in the situation under consideration.