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?

Answer

1 person found this helpful

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...

Was this answer helpful? Yes No
3 additional answers

No answers have been posted

More Actions

People come to ProFile for help and answers—we want to let them know that we're here to listen and share our knowledge. We do that with the style and format of our responses. Here are five guidelines:

  1. Keep it conversational. When answering questions, write like you speak. Imagine you're explaining something to a trusted friend, using simple, everyday language. Avoid jargon and technical terms when possible. When no other word will do, explain technical terms in plain English.
  2. Be clear and state the answer right up front. Ask yourself what specific information the person really needs and then provide it. Stick to the topic and avoid unnecessary details. Break information down into a numbered or bulleted list and highlight the most important details in bold.
  3. Be concise. Aim for no more than two short sentences in a paragraph, and try to keep paragraphs to two lines. A wall of text can look intimidating and many won't read it, so break it up. It's okay to link to other resources for more details, but avoid giving answers that contain little more than a link.
  4. Be a good listener. When people post very general questions, take a second to try to understand what they're really looking for. Then, provide a response that guides them to the best possible outcome.
  5. Be encouraging and positive. Look for ways to eliminate uncertainty by anticipating people's concerns. Make it apparent that we really like helping them achieve positive outcomes.

Select a file to attach: