T1 - How do I record a deferred capital gain on replacement real estate property

Karen K1 · ‎January 19, 2022

T1 - How do I record a deferred capital gain on replacement real estate property.

Can someone provide me with step by step instructions on how to record this? Thank you!

MikeACGA · ‎April 22, 2022

Have a look at ITA s.248(1) "former business property" and see if it fits your situation. You might discover that what you are trying to do is not legal. IT-491 might also assist.

Karen K1 · ‎March 10, 2023

From CRA's site - Replacement property

In some cases, you can postpone or defer including a capital gain or recapture of capital cost allowance (CCA) in calculating income. You might sell a business property and replace it with a similar one, or your property might be stolen, destroyed or expropriated, and you replace it with a similar one. To defer reporting the gain or recapture of CCA, you (or a person related to you) must acquire the replacement property within the specified time limits and use the new property for the same or similar purpose.

You can also defer a capital gain or recapture of CCA when you transfer property to a corporation, a partnership or your child.

roymabroor · ‎January 14, 2024

How will you do this in profile software for T1 and T2. Please elaborate.

MikeACGA · ‎January 14, 2024

It depends on the facts and can't simply be answered through community. And likely not applicable if not registered for HST. The replacement property rules do not apply to residential rental property, only business property.

Some things to look at in determining eligibility might include 69(1), 13(4.1) and 44. Maybe also 85 in your case? More info from CRA also in folio S3-F3-C1. The T1030 election needs to be considered.

For the T1 we report these disposals and acquisitions on the T2125. For the T2 we use the S8.