The property was my principal residence for only a year, then moved out to turn it into a rental property. Does this fall under a Sale of Principal residence?. Also, since it was only a year difference should I enter the same amount under proceeds of disposition and what I bought it for thus no gains? For example, bought the property for $250,000, turned it into a rental a year later, property is still worth about $250,000.
Based on the information you provided you have changed the use of the home from Principal residence ( personal use) to rental .
1. Disposition: Report deemed disposition (sale and immediate re-acquisition of property for different use) at FMV on the principal residence form. If property qualifies as Principal residence for all years owned there will be no taxable gain. If not Gain will be calculated on form T2091.
2. Acquisition: When completing your rental statement T776 add acquired rental property as class 1 asset at same FMV as cost base that is reported on T2091 for disposition.
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