Selling part of a property

When you sell only part of a property, you have to divide the adjusted cost base (ACB) of the property between the part you sell and the part you keep.

Example

Lily owns 100 hectares of vacant land of equal quality. The ACB of her land is $100,000. She decides to sell 25 hectares of this land.

To determine the ACB of the part of the land she kept, Lily needs to subtract the ACB of the 25 hectares of land she sold from the total ACB ($100,000). Since 25 is one quarter of 100, Lily subtracts $25,000 ($100,000 x 1/4) from $100,000 to determine the ACB of the land she kept ($100,000 − $25,000 = $75,000).

Lily's ACB for the 75 hectares she kept is $75,000.

For more information on selling part of a property, see IT264, Part Dispositions and its Special Release.

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