Principal residence exemption
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Thread: Principal residence exemption

  1. #1
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    Principal residence exemption

    I have a quick question about the principal residence exemption and new reporting requirements as of the 2016 year.

    For the past 4 years, I have worked and lived in the NWT and have made my income tax declaration in that jurisdiction. My wife worked in Alberta and lived in a condo legally registered under my name only. We were only separated physically for work reasons, but not "separated" in the sense that we are are very much married and otherwise consider ourselves a couple, if this makes a difference.

    In 2016, I sold my Alberta condo and I reported the basic information (date of acquisition, proceeds of disposition and description of the property) on my income tax and benefit return and claimed the full principal residence exemption.

    Was I correct in doing this? Thanks for any recommendation.


  2. #2
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    Unless you've left something out, it looks fine as:
    To designate a property as the principal residence, it does not have to be the place where the taxpayer lives all the time. The property will qualify as a principal residence if the taxpayer, taxpayer's spouse or common-law partner, or any of the taxpayer's children lived in it at some time during the year ... the principal residence does not have to be located in Canada.
    http://www.taxtips.ca/filing/principalresidence.htm

    The couple is limited to one principal residence so the ways I could see having a problem are if:
    • The spouse was living somewhere other than the Alberta condo.
    • The spouse was claiming a different house at the same time as the primary residence.
    • CRA had some reason to believe the two of you were no longer married.


    As these potential issues are covered off, AFAICT it is fine.


    Cheers

  3. #3
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    Thank you for your quick reply and the reference. My wife lives in "my" Alberta condo, so this confirms my understanding.

    2017 will be a different beast, as I plan to apply for Mexican temporary resident status and spend more than six months there, while still working in Canada but remotely with a few trips back to the NWT. The issue of residency will be a bit more difficult to address since I will be out of the country more than 6 months of the calendar year, and I may no longer be eligible to NWT residency, or Alberta for that matter...lots of questions when the time comes

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  5. #4
    Senior Member GreatLaker's Avatar
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    Here is a CRA page that describes the requirements to be claimed as a principal residence:

    http://www.cra-arc.gc.ca/tx/ndvdls/t...ht/hw-eng.html
    How does a property qualify?
    A property qualifies as your principal residence for any year if it meets all of the following four conditions:

    • It is a housing unit, a leasehold interest in a housing unit, or a share of the capital stock of a co-operative housing corporation you acquire only to get the right to inhabit a housing unit owned by that corporation.
    • You own the property alone or jointly with another person.
    • You, your current or former spouse or common-law partner, or any of your children lived in it at some time during the year.
    • You designate the property as your principal residence.
    There is more information in the "Ordinarily Inhabited Rule"
    http://www.cra-arc.gc.ca/tx/tchncl/n...ng.html#N10303

    CRA does not apply criteria of minimum # of days or % of time inhabited from what I have seen. I know a recreational property that is used a few times in the year can qualify.
    Invest your time actively and your money passively.

  6. #5
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    Quote Originally Posted by ykphil View Post
    ... 2017 will be a different beast, as I plan to apply for Mexican temporary resident status and spend more than six months there, while still working in Canada but remotely with a few trips back to the NWT.

    The issue of residency will be a bit more difficult to address since I will be out of the country more than 6 months of the calendar year, and I may no longer be eligible to NWT residency, or Alberta for that matter...lots of questions when the time comes
    In terms of stuff like provincial/territorial medical care as well as other benefits, sure.

    In terms of still being a Canadian tax resident, having a spouse in Alberta is a significant residential tie which would indicate you weren't severing residential ties so the way I read CRA's link, you'd still be a Canadian tax resident.
    http://www.cra-arc.gc.ca/tx/nnrsdnts...sdncy-eng.html
    http://www.cra-arc.gc.ca/tx/nnrsdnts...mprry-eng.html

    Not being a tax expert, all I have is CRA's link http://www.cra-arc.gc.ca/E/pub/tg/50...mpltng_yr_rtrn that says:
    If you resided outside Canada on December 31, 2016, but kept significant residential ties with Canada, you may be considered a factual resident of Canada. Use the forms book for the province or territory where you kept your residential ties.
    I would think that where you are mostly in Mexico but your spouse is in Alberta, my guess is that you'd be filing as an Alberta tax resident.

    Of course you will also have to be clear on what the Mexican tax regime is like as well as whether there is a Canada - Mexico tax treaty that would provide help that could be claimed. It may well be worth your while to consult a tax expert.
    https://yucalandia.com/living-in-yuc...ing-in-mexico/
    https://yucalandia.com/living-in-yuc...ies-in-mexico/



    Cheers


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