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Last updated: August 05 2010
Is Your Cottage Your Principal Residence?
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Is a house, cottage, condominium, apartment, trailer, mobile home, or houseboat.
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Is owned by you alone or jointly with another person.
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You, your spouse, your former spouse, or any of your children lived in it at some time during the year.
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You designate your property as your principal residence.
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Special consideration must be given to the tax status of long-held residences in determining tax consequences of the various plans clients have:
ï Pre 1972: No tax is payable on accrued gains on any capital assets
ï 1972 to 1981: Prior to 1982 one principal residence designation was allowed for each year for each spouse. Therefore for these years a husband and wife can designate different principal residences (e.g. a house and a cottage) to help minimize capital gains (and taxes) on a sale.
1982 to date: Since 1982 you have been able to designate only one home as your family's principal residence for each year. If you are married or are 18 years or older your family includes you, your spouse, and your minor children. If you are not married or are under age 18, your family includes your mother and father and your brothers and sisters (unmarried and under age 18).
ï 1993 to date: One principal residence designation allowed for each year to each conjugal relationship (married or common-law)
ï 1994: Prior to February 23, 1994, everyone had a $100,000 personal capital gains exemption. This meant that every Canadian could generate up to $100,000 of capital gains during their lifetime (up to this date) and not pay tax on those gains. In order to get the final benefit from this exemption, many people elected, on form T664, to use up their exemption and trigger a capital gain. The election increased the adjusted cost base of particular assets owned at that time so that when the property was actually sold, the taxable capital gain was that much less. If you filed a T664, you are considered to have sold your capital property at the end of February 22, 1994, and to have immediately reacquired it on February 23, 1994.
ï 1998 to 2001: Same-sex couples could elect conjugal status, thereby limiting their tax-exempt residences to one per unit
