How does capital gains tax apply when selling a property that was your principal residence for only a portion of ownership period? I've been doing some research on this, but wanted to make sure that I've got it right.
Can you claim tax free for the percentage of time that the property was your principal residence? For example, if you lived there for 2 years out of a 10 year ownership and capital gain at 10 years is $100K, can you claim $20K tax free?
Basically, but it goes by calendar year. I phoned CRA when I was in a similar situation. What you do is take the number of years you lived there (pretend you lived there from Dec 2015-Feb 2017-this counts as THREE years: 2015, 2016 and 2017) and how long you owned it (sold it in Aug 2019). You'd have to pay capital gains on 2 (2018 and 2019) of the 5 years, so if your profit (after all expenses: commission, capital costs, etc) was $100K, you'd pay capital gains on $40K.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
6y
@Paul Yun You must own the property for 2 out of last 5 years to get the capital gain exclusion on your personal residence. If you do that then you can exclude up to $250k in capital gain.
@Paul Yun You must own the property for 2 out of last 5 years to get the capital gain exclusion on your personal residence. If you do that then you can exclude up to $250k in capital gain.