I separated from my husband a year ago and moved out of our condo (he bought me out). We still co-own our cottage.
I'm now renting, but the cottage is the only property I own. So, question 1 - is it ok to make the cottage my principal residence? I spend about a month there every year.
I'd like to do that so if/when we sell it I won't have to pay capital gains on a couple of years' worth.
However when I read the forms, it seems you don't change your principal residence until you sell, is that true?
Question 2 - if I should change it now, what form do I use and which parts do I fill out/leave blank?
Thanks,
Lynda
You would change your principle residence when you sell your all or part of your home or when you have been deemed to sell your home (ex: you rented out your house, or gave it to a family member).
You can make your cottage your principal residence, as long as it meets all of the following 4 conditions:
- It is a housing unit, a leasehold interest in a housing unit, or a share of the capital stock of a co-op housing corporation you acquire only to get the right to inhabit a housing unit in that co-op.
- 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.
If you sold your other property before 2019, then you don’t need to fill out the principal residence form until you sell you cottage. At that time, you would fill in whatever applies to your situation. TurboTax would do most of the calculations for you.