Q&A: Capital loss on boat?

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Question: We have enjoyed our life aboard our boat (43 ft)
for the past three years but we have now decided to sell it. It appears that
used boat prices are another victim of the higher Canadian dollar as most large
boats are built in the U.S.

Many people call our boat a “floating cottage” so I was wondering
if I could claim a capital loss on the sale as would be applicable on a second
home which is not our primary residence. Thanks. – E.H.

Gordon Pape answers: It may be a floating cottage to you but
it’s just an old boat in the eyes of the Canada Revenue Agency and as
such it does not qualify for a capital loss claim. Ironically, however, you
would have to declare a capital gain if you sold it at a profit and pay tax
accordingly. The following paragraph from the CRA’s Capital Gains guide
sets out the policy:

“When you sell personal-use property, such as cars and boats, in most
cases you do not end up with a capital gain. This is because this type of property
usually does not increase in value over the years. As a result, you may end
up with a loss. Although you have to report any gain on the sale of personal-use
property, generally you are not allowed to claim a loss.”

I know it doesn’t seem fair but those are the rules they apply.

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