Canadian principal residence rented out - designate on

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Hi David,
What are the restrictions on claiming principal residences to
exempt
capital gains in Canada?   Is it possible to claim exemptions on
multiple
properties during the same year, for the proportionate periods in
which
you resided in them?
For example, if I move out of home #1 & rented it out on June 30,
and
moved into a newly purchased home #2 on July 1st, can I claim 1/2
year's
exemption on each of them when they are eventually sold?
Furthermore, should I file something in this year's income tax
return to
register the change of purpose for home #1?
thanks,
G XXXXX.
=================================
david ingram replies:
The answer is "sort of"
If you have lived in a place and move out and rent it, you have
the right to claim the old place as your principal residence for
an additional 4 years, even if you did not ordinarily inhabit it.
You make the claim on form T2091.
You can check out the form at
http://www.ccra-adrc.gc.ca/E/pbg/tf/t2091_ind/t2091_ind-03e.pdf
When you do that however, the house you are actually living in
becomes taxable for capital gains purposes.
Because the designation allows the 4 year Plus One.
If you are renting out House 1 and want to keep it tax free
(because you are willing to pay capital gains tax on house 2),
then you have file a declaration with the rental schedule for
house one.
The declaration would say something like:
I hereby elect to designate (description of building) as my
principal residence for the year _____ even though I did not
ordinarily inhabit it under the auspices of Section 45 (2).
______________________
signature and date
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