Part II - Manitoba lake front Capital gains tax -T2091

In answering the question about selling the Manitoba Lakefront property, I left out another method of lowering the tax by carrying a mortgage and spreading the payments out over five years. XXXXX
of CIBC Wood Gundy in Vancouver sent the reminder along.
The original email follows XXXXX's memo.
Hi David,
The writer might reduce taxes payable by spreading the gain over 5 years 
with a properly structured sale that allows him/her to claim a capital gains reserve.   
original question and answer
My question is: Canadian-specific
QUESTION: We purchased beach front property in Manitoba, Canada 9 years ago.  The cost was $18,000.  We have received an offer to purchase the land for $500,000 U.S.  We would like to know what kind of tax breaks we can use to not have to give half of it away to the Canadian government.
david ingram replies:
The good news is that Canada only taxes 50% of the profit at your marginal tax bracket.  That means that the most you will pay is about 25% of the profit.  You should be feeling better already.
I cannot tell if this property had a home on it.  If it did, the whole thing can be tax free because you can designate either your house in town OR your recreational cabin as your tax free prinicpal residence.  This would be true if you only had a trailer on it.
The downside is that you would have to pay Capital gains tax on any increased value of your town home.  
However, there is no possible way that a Winnipeg, Brandon, Portage La Prairie, Selkirk or Minnedosa house went up at a comparable rate.
If this is the case, you would file form T2091
The worksheet is at:
But, if you just left this land vacant for the 9 years, it is taxable.  
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