Capital gains and retrospective appraisers in Canada
A retrospective appraisal gives the fair market value of a property on a date in the past. It is the appraisal most often used for tax: to establish a cost base, to value a property on the day its use changed, or to support a transfer between related people that the tax rules treat as happening at market value.
The appraisers listed here prepare retrospective and current fair market value appraisals for owners, accountants and lawyers across Canada. They value the property; the tax treatment is a question for your accountant.
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When a home becomes a rental, or a rental becomes your home, the tax rules generally treat the property as sold and bought back at fair market value on that date. The gain up to the change, and the new cost base going forward, both hang on that value.
Owners often discover this years later, when they sell. By then the change of use date is in the past, and a retrospective appraisal as of that date is the way to reconstruct the figure. There are elections that can defer the deemed disposition in some cases; your accountant will know whether one applies.
Capital gains appraisal and the principal residence exemption
Where a property was a principal residence for only some of the years you owned it, the exemption covers part of the gain, and the calculation needs values at particular dates. A property that combines a home with a rental unit or a business use can need an allocation as well.
Transfers between family members, to a trust or to a corporation are generally treated as happening at fair market value whatever price is written on the transfer. An appraisal at the transfer date supports the figure used.
Fair market value appraisal: what makes one hold up
A retrospective report is only as good as its comparable sales. The appraiser needs sales from around the effective date, not today’s market adjusted backwards, and a clear description of the property as it was then, before the renovation, before the addition.
Photographs, old listings, permits and insurance records all help establish that earlier condition. The more a report explains why each comparable was chosen and how it was adjusted, the easier it is for an accountant, and anyone reviewing the return, to follow.
Common questions
Can you get an appraisal for a past date?
Yes. A retrospective appraisal values the property as of a stated date in the past, using sales from around that date and the property’s condition at that time. It is a standard assignment for tax, estate and family law purposes.
Does the CRA require an appraisal?
There is no general requirement to attach one. But where a value is used on a return, for a change of use, a deemed disposition or a non-arm’s-length transfer, the taxpayer has to be able to support it if asked, and an independent appraisal is the strongest support available.
What is the difference between a retrospective and a retroactive appraisal?
In practice, nothing. Both describe an appraisal with an effective date in the past. Appraisers usually say retrospective.
Is an assessment value good enough for capital gains?
It is weak evidence. An assessment is a mass valuation for property tax at a base date set by the province, and it often differs from market value on the date that matters. It may be a reasonable cross-check, not a substitute.
How far back can a retrospective appraisal go?
As far as there is reliable sales data and information about the property. Values decades back are possible, but the further back the date, the thinner the evidence and the more the report has to explain.