November 1, 2017
All Tax Articles

General rules

Personal use property (“PUP”) is defined generally as property that you or a non-arm’s length person uses primarily for personal purposes. PUP typically includes property such as your home, cottage, car, furniture, appliances, clothing, art work, bicycles, and so on.

If you sell a PUP at a gain, one-half of it is included in your income as a taxable capital gain. This is the same rule that applies to any capital property.

If you sell a PUP at a loss, the loss is normally denied. However, a loss may be claimed if the property is a “listed personal property”, though only against gains from listed personal property.

Listed personal property is defined to mean the following types of property:

- A work of art;

- A rare book, folio or manuscript;

- Coins;

- Stamps; and

- Jewelry.

Losses from listed personal property can offset gains from listed personal property, but not other property. If your gains from listed personal property exceed your losses for a taxation year, one-half of the net amount is included in your income. If your losses exceed your gains for a taxation year, your net gain is nil. The excess losses can be carried forward 7 years or back 3 years to offset gains from listed personal property in those years.


In 2017, you sell a piece of art (a listed personal property) at a gain of $10,000. In 2015, you sold a piece of art at a loss of $4,000, and you had no gains in that year from listed personal property.

In 2017, you can carry forward the $4,000 loss against the $10,000 gain, resulting in a $6,000 gain. Half of that, or $3,000, will be included in your 2017 income. 

One thousand dollar threshold

All PUP, whether listed personal property or not, is subject to a “de minimis” threshold in terms of the cost and proceeds of disposition. Basically, where either the cost or the proceeds of disposition is less than $1,000, it is deemed to be $1,000. The threshold is meant to ignore PUP that is of relatively low value. (If you buy PUP for $100 and sell it for $900, both amounts are deemed to be $1,000 so there is no gain or loss for tax purposes.)


In 2017, you sell a piece of art that cost you $800. You sell it for $5,000.

Your cost of the art will be deemed to be $1,000, so that you will have a $4,000 gain. Half of that will be included in your income.

You also sell a rare book that cost you $900. You sell it for $800.

Your cost and sales proceeds for the book will be deemed to be $1,000, so you will have no gain or loss from the book.

This letter summarizes recent tax developments and tax planning opportunities from a third-party affiliate; however, we recommend that you consult with an expert before embarking on any of the suggestions contained in this blog post, which are appropriate to your own specific requirements. Please feel free to get in touch with Lee & Sharpe to discuss anything detailed above, we would be pleased to help.
Douglas K. DeBeck

Hello, my name is Douglas K. DeBeck, I am a partner at Lee & Sharpe.

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