We bought a house in Sept 2016. We renovated it and moved into in Dec 2016. We were in a condo and rented it out in Dec. Does this mean we "disposed" of our condo?

[krischarkenemy]

How do we claim property tax since we paid property tax for both properties in 2016 (the house from Sept 2016 until Dec 2016 and the condo from Jan, 2016 until November, 2016)?  Do we claim it for both, or just one?

[TonyC11 · Accepted solution]

You can claim property tax credit  (or Trillium benefit in Ontario) for your principal residence only, which means one residence at a time.

If you wish to claim property tax on a rental, it would have to treated as a business and you would then need to report rents received as business income.

[krischarkenemy]

Thanks. I am planning to claim the property tax as an expense for the condo rental, but just the property tax for the month of December since we only rented it out in December. So my questions are:
1) In the education property tax section, are you saying that we have to choose and only claim property tax for either the house from September-Dec or the condo from January until November?  If so, then obviously it would be more beneficial to claim the property tax from the condo as that would be more as we paid for 11 months worth.  
2) I'm still unclear on the whole "disposed of" thing.  Did we "dispose" of our condo, even though we didn't sell it, we just converted it from our residence to a rental?

[TonyC11]

You can claim for both places, just not in the same time. In other words, you can only claim a total of 12 months for any year. You can claim eithe property tax or rental for any place that was your principal residence in 2016

[Borden-Rhodes]

To supplement the other response, there is a deemed disposition when you change your primary residence use from a residence to a rental property. At the moment the use changes (that is, your tenants move in), you are considered to have 'sold' the property for fair market value and immediately 'bought' it at the same price. This 'sale' triggers a capital gain (which you can eliminate by designating it as a principal residence). The 'bought' price becomes the cost basis for calculating things like CCA and capital gains on the rental property.

There are ways to get around this and continue designating your condo as a principal residence even if you've moved out and rented it. As said in the other answer, however, you can only designate your house or your condo as a principal residence in any given year. Accordingly, depending on the facts, it may be advisable to continue designating your rented condo as a principal residence and absorbing the capital gains on your house.

Also, the principal residence exemption applies to the 'family unit', so if you were thinking of claiming your condo as a primary residence and having a family member claim the house, CRA's onto that and won't let you.

More reading (in largely human-readable English): http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s1/f3/s1-f3-c2-eng.html