How to define percentage to deduct for rental of basement suite ? if I do deduct mortgage interests, when I sell the house, would it still 100% principle home?

[faye909]

my question is if I do claim mortgage interests for my basement rental, would I be charged partial capital gain when I sell my principle home?

[TurboTaxTerry · Accepted solution]

You are usually considered to have changed the use of part of your principal residence when you start to use that part for rental or business purposes.

However, you are not considered to have changed its use if:

• your rental or business use of the property is relatively small in relation to its use as your principal residence;
• you do not make any structural changes to the property to make it more suitable for rental or business purposes; and
• you do not deduct any CCA on the part you are using for rental or business purposes.

If you meet all of the above conditions, the whole property may qualify as your principal residence, even though you are using part of it for rental or business purposes.

Base your claim of expenses based on the occupied square footage of the rental unit compared to the total square footage of the building.