Mr. X, who had acquired in 2002 a three-unit rental building (the "Triplex") consisting of three identical units, then became a non-resident between 2002 and 2015. During that period, he rented the three units to third parties and reported the rental income on a net basis (including deductions for CCA) pursuant to a s. 216 election. On July 1, 2016, he again became a Canadian resident and, on July 15, 2016, moved into one of the three units in the Triplex for use as his principal residence.
CRA indicated that Mr. X's use of a unit as his principal residence from July 15, 2016 likely represented a partial change of use of the Triplex, so that it was likely that 1/3 of the Triplex was now being used for personal purposes for purposes of ss. 13(7)(d)(ii) and 45(1)(c)(i). The resulting deemed disposition for proceeds of disposition equal to 1/3 of the Triplex FMV at that time could result in recapture and a taxable capital gain.