44 What is Personal Use Property and Listed Personal Property? What are the tax implications? Why do these rules exist?

Raminder Sidhu

CRA defines personal use property (PUP) as property you own primarily for personal enjoyment, this would include most personal or household items such as vehicles, furniture, boats, etc. PUP generally does not increase in value overtime.

Listed-personal property (LPP) is a type of PUP; the main difference between the two is that LPP is property which may increase in value over time such as jewellery, works or art, coins, etc. Capital gains on the sale of PUP and LPP are included in NITP (under section 3(b)).  Capital losses for PUP are denied and capital losses for LPP can only be applied against LPP gains.   PUP losses are denied because these items typically depreciate due to personal use and are therefore a personal expense (rather than a capital loss).

LPP losses can be applied against LPP gains going back 3 years or forward 7 years. For instance if you incurred a loss from disposition of LPP of $2,000 in 2020 you can now use that loss to reduce gains in 2017, 2018, and 2019 or apply them to any gains up until 2027.

When calculating PUP and LPP gains and losses you need to be aware of the $1,000 “floor rule”.  This rule basically bumps up the ACB and selling price to $1,000 (effectively this makes it so there are no PUP gains on low value items).  The ‘floor rule’ is as follows:

  • If the adjusted cost base (ACB) of the property is less than $1,000, its ACB is considered to be $1,000
  • If the proceeds of disposition are less than $1,000, the proceeds of disposition are considered to be $1,000
  • If both the ACB and the proceeds of disposition are $1,000 or less, you do not have a capital gain or a capital loss.
  • If the ACBor proceeds of disposition is more than $1,000, you may have a capital gain or loss.

For example, John purchased furniture for a price of $1,000 and a painting for $900 in 2017, now in 2019, John sells the furniture and the painting at $800 and $1,400 respectively. On the disposition of the furniture there is no loss as the furniture is deemed to be sold for $1,000 (floor rule).  The painting will have an LPP capital gain of $400 as the ACB was less than $1,000 so according to the floor rule, the ACB is $1,000.

Interactive content (Author: Kimmy Thandi, February 2020)

Interactive content (Author: Jenny Tan, January 2020)

References and Resources:

January 2020


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Introductory Canadian Tax by Raminder Sidhu is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.

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