My question is: Canadian-specific
QUESTION: I have a rental property that I intend on demolishing and
replaceing with a personal residence. I know that I will have to pay capital
gains due to the change in use. Since the existing house will no longer
exist at time of 'change of use' can I use the land value of the most recent
assessment as the fair market value to determine the amount of the capital
gain?
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david ingram replies:
You should check listings to find out what your lot is worth now. As an
example, my own lot's real value is $100,000 higher than the official
provincial property assessment.
At the same time, remember that you have a potential terminal loss on the
value of the house you are tearing down.
There is a pretty good explanation in the government's own booklet on
capital gains.
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