ARTICLE · 12 OCTOBER 2016

Proposed Changes To Canada's Principal Residence Claim

Crowe Soberman LLP

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The sale of a capital property for an amount greater than its cost generally leads to a capital gain, 50 percent of which is taxable in Canada.

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Crowe Soberman LLP

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What is Principal Residence Exemption?

The sale of a capital property for an amount greater than its cost generally leads to a capital gain, 50 percent of which is taxable in Canada. If the property is the seller's principal residence, the gain resulting from the disposition can be sheltered by the principal residence exemption ("PRE"). Only taxpayers who are individuals or certain trusts are eligible to claim the PRE.

In order to qualify as a principal residence, the property must meet certain conditions. Generally speaking, the property must be owned and ordinarily inhabited by a Canadian resident individual or certain trust in the year. Only one property can be designated as the taxpayer's principal residence in any given year.

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