Tax wiki
s. 43.1
PART I — Income Tax · DIVISION B — Computation of Income · SUBDIVISION C — Taxable Capital Gains and Allowable Capital Losses
Life estates in real property
Not yet annotated · Text current to 2026-06-21 · section last amended 2013-06-26
Current text
Notwithstanding any other provision of this Act, if at any time a taxpayer disposes of a remainder interest in real property (except as a result of a transaction to which subsection 73(3) would otherwise apply or by way of a gift to a qualified donee) to a person or partnership and retains a life estate or an estate pur autre vie (in this section referred to as the “life estate”) in the property, the taxpayer is deemed
to have disposed at that time of the life estate in the property for proceeds of disposition equal to its fair market value at that time; and
to have reacquired the life estate immediately after that time at a cost equal to the proceeds of disposition referred to in paragraph 43.1(1)(a).
Idem
(2)Where, as a result of an individual’s death, a life estate to which subsection 43.1(1) applied is terminated,
the holder of the life estate immediately before the death shall be deemed to have disposed of the life estate immediately before the death for proceeds of disposition equal to the adjusted cost base to that person of the life estate immediately before the death; and
where a person who is the holder of the remainder interest in the real property immediately before the death was not dealing at arm’s length with the holder of the life estate, there shall, after the death, be added in computing the adjusted cost base to that person of the real property an amount equal to the lesser of
the adjusted cost base of the life estate in the property immediately before the death, and
the amount, if any, by which the fair market value of the real property immediately after the death exceeds the adjusted cost base to that person of the remainder interest immediately before the death.
Source: Justice Laws Website. Not an official version.
Historic text
Immediately preceding version, in force from 2012-01-01 to 2013-06-25:
Show the text in force 2012-01-01 to 2013-06-25
Life estates in real property
43.1 (1) Notwithstanding any other provision of this Act, if at any time a taxpayer disposes of a remainder interest in real property (except as a result of a transaction to which subsection 73(3) would otherwise apply or by way of a gift to a qualified donee) to a person or partnership and retains a life estate or an estate pur autre vie (in this section referred to as the “life estate”) in the property, the taxpayer is deemed
(a) to have disposed at that time of the life estate in the property for proceeds of disposition equal to its fair market value at that time; and
(b) to have reacquired the life estate immediately after that time at a cost equal to the proceeds of disposition referred to in paragraph 43.1(1)(a).
Idem
(2) Where, as a result of an individual’s death, a life estate to which subsection 43.1(1) applied is terminated,
(a) the holder of the life estate immediately before the death shall be deemed to have disposed of the life estate immediately before the death for proceeds of disposition equal to the adjusted cost base to that person of the life estate immediately before the death; and
(b) where a person who is the holder of the remainder interest in the real property immediately before the death was not dealing at arm’s length with the holder of the life estate, there shall, after the death, be added in computing the adjusted cost base to that person of the real property an amount equal to the lesser of
(i) the adjusted cost base of the life estate in the property immediately before the death, and
(ii) the amount, if any, by which the fair market value of the real property immediately after the death exceeds the adjusted cost base to that person of the remainder interest immediately before the death.
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- 1994, c. 7, Sch. VIII, s. 13, c. 21, s. 16
- 2011, c. 24, s. 6
Earlier versions: Justice Laws point-in-time versions of the Act (from 31 August 2004), and CanLII (under “Versions”). On Justice Laws, each version of section 43.1 links to the one before it.
Enacting and amending legislation
- 1994, c. 7, Sch. VIII, s. 13, c. 21, s. 16; 2011, c. 24, s. 6; 2013, c. 34, s. 103(F)
Text before 2004 is found in the annual Statutes of Canada cited above. Application and coming-into-force provisions are not part of the consolidation; see the amending Acts.
Cross-references
Citation
Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 43.1.