Originally Posted by dbd33

As I read the regulations, there's no tax in Canada because it's the principal residence:

https://www.canada.ca/content/dam/cr.../t4037-20e.pdf

If it were not the principal residence, the capital gain would be the amount of the increase in value since the taxpayer moved to Canada. Half of that is taxable. It might then fall under the lifetime single use capital gains exemption (that was $400,000 when I wanted to use it).

I think that, in the typical case, where the taxpayer only ever owned one house at a time and sold the house within a few years of moving to Canada, it is unlikely that Canadian CGT would be payable.

Originally Posted by abaddon

Does the lifetime single use capital gains exemption apply to individuals? Or is it for small businesses only?

Originally Posted by dbd33

As I read the regulations, there's no tax in Canada because it's the principal residence:

https://www.canada.ca/content/dam/cr.../t4037-20e.pdf

If it were not the principal residence, the capital gain would be the amount of the increase in value since the taxpayer moved to Canada. Half of that is taxable. It might then fall under the lifetime single use capital gains exemption (that was $400,000 when I wanted to use it).

I think that, in the typical case, where the taxpayer only ever owned one house at a time and sold the house within a few years of moving to Canada, it is unlikely that Canadian CGT would be payable.

Originally Posted by dbd33

The exemption is for individuals. Whether or not it applies to gains on houses I don't know but I think you can claim the house as your principal residence.

Originally Posted by abaddon

Thank you again. I live in Toronto, if there is an accountant/tax advisor that you can recommend, please send me a message.

Originally Posted by abaddon

I have a similar situation and have a follow-up question. I have been renting in Canada the whole time we have been here. Could I deem my UK property to be my principal residence (it's the only property I own) making it exempt from Canadian tax?

Originally Posted by abaddon

Thank you for your replies. I have a valuation from the time that we left, so that is covered. I will consult an accountant to figure out what my chances are of claiming principal residence. I know there is some grey area on this - there may be circumstances where you can claim principal residence even if we didn't live there. My mother did live there, but I don't think that is a relative that counts for principal residence purpose. Your replies have been very helpful. Thank you.

Originally Posted by Farmer on a bike

There is no grey area, the law is quite clear on this. To maintain principal residence while renting in another country, could only work if a spouse were inhabiting the house overseas. If no spouse and there were dependent children living in the house with a carer, this may also work.

Plenty of CPAs to choose from, for a larger firm with international experience, try MNP.

Originally Posted by abaddon

Thanks I will give MNP a call tomorrow. I want to know if there is any downside to attempting to claim the Principal Residence Exemption - if the worst they could do is deny the claim and then I pay the CGT, then it is maybe worth trying.

Originally Posted by Farmer on a bike

Only if you sell within the first tax year of becoming a tax resident of Canada, after that any gain from deemed acquisition cost subject to CGT. The taxpayer cannot deem anything, it either is or isn't, not open to interpretation. Principal residence has nothing to do with owning or renting, it is where a person ordinarily inhabits, a rented house can be principal residence.

Originally Posted by Farmer on a bike

There is no grey area, the law is quite clear on this. To maintain principal residence while renting in another country, could only work if a spouse were inhabiting the house overseas. If no spouse and there were dependent children living in the house with a carer, this may also work.