Mrs. X, who owned a duplex, 2/3 of which was her principal residence and 1/3 of which was rented to a third party, made a gift of the duplex to her grandson. CRA indicated that in allocating the deemed proceeds under s. 69(1)(b) between the principal residence and rental portions:
Regardless of the method used to allocate the acquisition cost and proceeds of disposition of the building to the leased portion (generally based on the total area of the building), we are of the view that it is generally reasonable to allocate the acquisition cost and proceeds of disposition of the land using the same method.