There is a provision in the Canadian income tax act that allows you to shelter any capital gain realized on the disposition of your principal residence.
Needless to say, this provision relieves you from paying a burdensome tax bill, especially with the recently skyrocketed real estate prices in the Greater Toronto Area.
Amongst the types of property that may qualify as your principal residence include the following:
- Housing unit
- House
- Cottage
- Houseboat - Leasehold interests in a housing unit
The property would qualify as your principal residence if:
- You own the property jointly or with another person
- The property is inhabited by you or certain family members (current or former spouse or common-law partner, or any of your children)
If you simultaneously own more than one property and reside in them at any time during the year (residing for full year is not required) you can claim both properties as your principal residence. However, the important caveat is that you can only designate one property per year as your principal residence.
For professional advice contact Alpha Accountzy, Accounting & Tax Solutions.
