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I bought my house in 2013 and have been renting it to present time. I never lived in it. I am thinking of starting to live in the house in 2025 and 2026 and then sell it in 2027. What do I have to do to claim the house as my principal residence? Do I have to pay any capital gains tax?

Chris W. Rea
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user122866
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1 Answers1

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You will be able to claim principal residence exemption for the years you live in it, not for the prior years where you didn't. In the year where you stop renting it and start living it, you may also need to declare a 'deemed disposition', effectively calculating the gain during the time you had it rented, thus 'resetting' your new cost basis so that when you sell it in 2027, any gain after the 'change in use' will not be taxable.

You can't avoid the gains on the years prior to living in it.

Here's a starting point on reading more from the CRA:

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/principal-residence-other-real-estate.html

Grade 'Eh' Bacon
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