Can you claim partial principal residence exemption on a rental property you lived in?

I have a couple who bought a rental property in 2006 for 17,500.00. They lived in one unit and rented the other 3 until 2015 when they moved into another home. They sold the rental unit in 2016 for 113,500.00. Is there a way to claim partial principal residence exemption for the years they lived there or are they stuck paying capital gains on the entire amount?


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Hi there,

This is an interesting question and I would say 'No' they don't have to pay the capital gains tax on the growth of the property because they did live in it and it's therefore a Primary Residence. Over the years they were permitted to deduct reasonable expenses on the part of the property that was used to generate Rental Income and now that it's sold they may have to be careful in the Recapture of CCA...

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