The Principal Residence Exemption

Laura M. Peach

PREPARING FOR PROPOSED CHANGES Many taxpayers are aware that an exemption from tax on capital gains may be available when those gains arise from the disposition of their principal residence. However, proposed changes to the Income Tax Act could limit the ability of many taxpayers to claim the principal residence exemption (the “PRE”). Trustees, in particular, need to be aware of the proposed changes. Current Requirements Generally speaking, a Canadian resident individual can claim the PRE if the taxpayer owned the housing unit and it was ordinarily inhabited by the taxpayer or his or her spouse or child. In…

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