BUTTON UP! Declaring personal residence for capital

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This question is dedicated to the Button.  What would we do without a Button?
We moved from our rental to our primary residence 5 months ago. How long must we reside here until we can sell it so that the gains are tax free? Thanks for your response.
david ingram replies:
There is no set time as there is in the US where you must live in a house for two out of the last five years to claim their $250,000 per person exemption. In the US, if there is a good reason for selling such as job transfer, death, illness, job loss, the $250,000 is prorated by the number of days you lived in it divided by 730 (2 years) times the $250,000 so that if you had lived in it for one year the exemption would be 365/730 x's $250,000 or $125,000.
In Canada, there is no limit to the profit and no stated period other than that you can only have one personal house at a time  AND it has to have been bought as your personal residence.
So, in Canada,  if you buy a place with the intention of reselling it for a profit and just move into it to make it "look" like a personal principal residence, the profit would be taxable at straight income tax rates. The sale would not even be qualified for a capital gains tax rate.
On the other hand, if you built your dream home and moved into it and were transferred to another city a month later and sold it for a $100,000 profit after living in it for a month, it would be tax free.
The real problem here that sort of involves your question takes place when someone moves into a property that they have been renting out because they think that if they are living in it when they sell it, the sale will be tax free.
What happens here is that the mere act of moving in creates a deemed disposition and an immediate profit which is taxable now unless they file another election under Section 45(3) of the tax act to elect to defer paying the tax until the actual sale in the future. 
You can get 27 pages more information about Canadian Capital Gains Tax by going to www.centa.com clicking on [Tax Guide] and then on [capital gains].
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