Does the principal residence exemption cover my whole BC acreage or cottage?

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It shelters the gain on your home and up to half a hectare of land around it, one home per family a year, and land past half a hectare only where it's needed to use the home, such as a minimum lot size the zone sets. When you sell a home you've lived in, Canada's principal residence exemption can take the capital gain out of income tax. On a city lot it usually covers all of it. On a rural lot over half a hectare (about 1.24 acres), or when a family owns a house and a cottage, it may cover only part, and how much turns on rules a buyer can plan for. Look up the address or PID on PlaceDossier to see the record for that lot. What can be one: A house, a cottage, a condominium unit, a mobile home or a houseboat, with the land under it and the land that contributes to its use and enjoyment as a home, that you, your spouse or common-law partner or your child ordinarily lived in during the year, even for a short time each year (Income Tax Act s. 54; Folio S1-F3-C2 ¶2.7, 2.10, 2.11). A cottage you use each summer can qualify; a property owned mainly to earn income, lived in only briefly, generally doesn't. One home per family a year: For each year since 1982 a family (you, your spouse or common-law partner and your unmarried children under 18) can designate only one property (s. 54; Folio ¶2.13). A family that owns a house and a cottage chooses, when it sells one, which years to give it; the years given to one can't go to the other. The years that count: The share of the gain sheltered is one plus the years designated, over the years owned (s. 40 (2) (b); Folio ¶2.20). The extra year lets you sell one home and buy another in the same year without losing a year. Years you owned the land before living there, building on vacant land for instance, count as years owned and not lived in. Half a hectare, and more only if needed: Land past half a hectare is part of the principal residence only where you show it was needed for the home's use and enjoyment, not merely wanted (s. 54; Folio ¶2.33, 2.34). A zoning bylaw's or the Province's minimum lot size over half a hectare, or a rule that stopped the land being subdivided, normally makes the extra land part of it for the years the rule applied; land that could have been split off and sold doesn't count (Folio ¶2.35, 2.38). On a rural lot, the zone's smallest new lot (our report's zoning section, where the bylaw is summarised) is the usual evidence (our reading). Farmland: On a farm with the home on it, the gain is split one of two ways: the home and a share of land valued at the greater of half a hectare of farmland or a typical residential lot nearby, or, by election with the return, the whole property's gain less $1,000 plus $1,000 for each year it was your principal residence (s. 40 (2) (c); Folio ¶2.39 to 2.44). Renting or a business: Turning the whole home into a rental is a deemed sale at its value then, which an election can defer, and the home can still be designated for up to four years while rented (s. 45 (1), (2); Folio ¶2.48, 2.50). A suite or a home business that stays ancillary to living there, with no structural change and no capital cost allowance claimed, usually doesn't change its use (Folio ¶2.59). Reporting the sale: Since 2016 a sale has to be reported on Schedule 3 of the return with the designation, on Form T2091(IND) when the whole gain isn't sheltered, even when no tax is owed (Folio ¶2.15). The CRA can accept a late designation, with a penalty of $100 a month up to $8,000 (s. 220 (3.21), (3.5)). Selling within a year: A home held under 365 days in a row is taxed under the federal flipping rule as business income and isn't sheltered, unless a life event fits (s. 12 (12) to (14)), and BC's home flipping tax can apply on its own within two years. What it means for a buyer: On an acreage, assume only the home and half a hectare are sheltered unless the zone or a covenant stops the land being split, and keep that evidence from the day you buy. With a house and a cottage, plan which one you'll designate with an accountant before you sell either (our reading).

Does the principal residence exemption cover my whole BC acreage or cottage?

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