No reason to second guess taxpayer’s fair market value figure since taxpayer was realtor

Tax court of Canada | Tax | Income tax | Administration and enforcement

Taxpayer’s son owned property and rented it to occupants who used it as marijuana grow-op. Taxpayer funded renovations to house in amount of $22,353 and allowed her daughter and grandchild to live on property. In year of transfer to taxpayer, city issued property tax notice for taxes due and showed assessment value of $136,700 for property. Property was transferred to taxpayer at time when son was tax debtor who owed $42,213. Minister assessed taxpayer under s. 160 of Income Tax Act in amount of $42,213 on basis that fair market value of property at date of transfer was $150,000 and consideration received was $104,000, including mortgage assumed, insurance and property management fees, but not including renovation expenses. Taxpayer appealed. Appeal allowed. Matter was remitted to Minister for reconsideration. Fair market value of property was $150,000, as per taxpayer’s signed statement on date of transfer, and there was no reason to second guess figure since taxpayer was realtor. Renovation expenses of $22,353 should be added to consideration figure on same basis that Minister allowed deemed property management fees as recognition of taxpayer’s continuing maintenance and repair of residential structure as necessary. Deemed property management amount allowed by Minister should be reduced by 50 per cent in light of daughter and grandchild having lived on property during much of renovation period.

Thompson v. The Queen (2018), 2018 CarswellNat 1277, 2018 TCC 64, B. Russell J. (T.C.C. [General Procedure]).


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