How long can you rent out a principal residence in Canada?

This is important because on rental properties you are allowed to designate a maximum of 4 years for the principal residence exemption, while the property is being rented out (provided you are still a Canadian resident).

Can a property be used as a rental for 2 years?

If you used and owned the property as your principal residence for an aggregated 2 years out of the 5-year period ending on the date of sale, you have met the ownership and use tests for the exclusion. This is true even though the property was used as rental property for the 3 years before the date of the sale.

How many years do you have to live in your home to be considered primary residence?

You then lived in the home as your primary residence for the next 2 years. You had a total of $150,000 of capital gains over the 6 year period. However, you lived in the home for 2 out of 6 years since 2009, so only 1/3 (2 divided by 6) of the capital gains will be considered qualifying use.

When does a property qualify as a principal residence?

Similar to the 45 (2) election, a property can qualify as a taxpayer’s principal residence for up to 4 years prior to a change in use covered by subsection 45 (3) election (provided the taxpayer is a Canadian Resident during that time) David purchased a home in 2000 and rented it out immediately until 2006.

Can a primary residence be a rental property?

While it is a rental property in terms of having to recapture any depreciation you have taken, if you live there in the 2 out of 5 years as your primary residence as of the date of sale, you can still qualify for the exclusion. June 4, 2019 2:27 PM

When to convert rental property to principal residence?

Investors would move into rental properties every two years and realize the maximum tax benefit on many properties. In 2008 this tax law changed.