Real Estate Property disposition rules prior ceasing residency in Canada

If you intend to emigrate from Canada and sell your house, it is advisable to complete the sale while you remain a resident, so that you can claim the principal residence exemption and avoid paying taxes on the resulting capital gain.

Non-resident owner of a principal residence in Canada

A property in Canada owned by a non-resident in a particular tax year may be eligible to be considered as their principal residence for that year, provided that the requirements of the section 54 definition of a principal residence are met.

This could be achieved through, for instance, the non-resident's spouse fulfilling the "ordinarily inhabited" rule or making a subsection 45(2) or (3) election.

However, the use of the principal residence exemption is limited by the number of tax years following the acquisition date during which the taxpayer was a resident in Canada.

Therefore, even if a property in Canada owned by a non-resident qualifies as their principal residence, they may still be unable to use the exemption to avoid paying taxes on the gain from the sale due to their residency in Canada.

Tax Tip: Sell your principal residence real estate property before leaving Canada.

Disclaimer:
“Please note that the information provided in this article is of a general nature and may not be accurate for your specific situation. The information is current as of the date of posting and is not intended to provide legal advice. It's always recommended that you consult with a professional accountant and lawyer for personalized guidance and advice."