• Last Updated:
  • Dec 30th, 2018 2:50 pm
[OP]
Sr. Member
Jun 18, 2018
585 posts
285 upvotes
Toronto

Primary Residence Election

Question specifically regarding this election:

https://www.canada.ca/en/revenue-agency ... perty.html

My understanding from this is that I can fill this election and essentially turn my current personal residence into a renting property for 4 years as a PR (correct assumption?) Any requirements/restrictions on this? Has anyone had experience doing this and did the CRA request anything?

I was curious on the indefinite requirements as well. Would just being 40km+ away from my place of employment suffice (regardless if my employment changes and I still meet that requirement), or would I need something from the company that says they want me to relocate or something along the lines of that? Hard to define what "wants you to relocate" means when we're discussing the same province, since relocation in my mind usually means from one province to another.

Thanks.
Last edited by Electrah on Dec 22nd, 2018 2:35 pm, edited 1 time in total.
5 replies
Deal Fanatic
User avatar
Sep 1, 2005
7464 posts
2682 upvotes
Markham
Part of your link got messed up. I presume this is what you're referring to.

You can extend the four year limit indefinitely if all of the following conditions are met

You must meet ALL of the conditions, not just one.
To meet "wants you to relocate"....usually the employer pays for your to moving cost. I think this is good evidence of "wants you to move".
You could live on the border of Ottawa and Gatineau and only move two blocks so "same province" not that relevant...I would use the "at least 40km" criteria that CRA uses for the moving expenses deduction.

Caveat on all of the above....seek good tax advisor for advice/filing when dealing with big money decisions/issues.



https://www.canada.ca/en/revenue-agency ... perty.html

Changing all your principal residence to a rental or business property

When you change your principal residence to an income producing use such as a rental or business property, you can make an election not to be considered as having started to use your principal residence as a rental or business property. This means, if you make this election, you do not have to report any capital gain when you change its use. However:

you have to report the net rental or business income you earn; and
you cannot claim capital cost allowance (CCA) on the property.
While your election is in effect, you can designate the property as your principal residence for up to four years, even if you do not use your property as your principal residence. However, during those years:

you cannot designate any other property as your principal residence; and
you must be a resident or deemed to be a resident of Canada.
You can extend the four year limit indefinitely if all of the following conditions are met:

You live away from your principal residence because your employer, or your spouse's or common-law partner's employer, wants you to relocate.
You and your spouse or common-law partner are not related to the employer.
You return to your original home while you or your spouse or common-law partner are still with the same employer, or before the end of the year following the year in which this employment ends, or you die during the term of employment.
Your original home is at least 40 kilometres (by the shortest public route) farther than your temporary residence from your, or your spouse's or common-law partner's, new place of employment.
If you make this election, there is no immediate effect on your income tax situation when you move back into your residence. However, if you change the use of the property again and do not make this election again, any gain you have from selling the property may be subject to tax.

To make this election, attach a letter signed by you to your income tax and benefit return of the year in which the change of use occurs. Describe the property and state that you want subsection 45(2) of the Income Tax Act to apply. If you started to use your principal residence as a rental or business property in the year, you may want information on how you should report your business or property income. If so, see the T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income guide or the T4036, Rental Income guide.
We're all bozos on the bus until we find a way to express ourselves...

Failure is always an option...just not the preferred one!
[OP]
Sr. Member
Jun 18, 2018
585 posts
285 upvotes
Toronto
gr8dlr wrote:
Dec 21st, 2018 3:21 pm
Part of your link got messed up. I presume this is what you're referring to.

You can extend the four year limit indefinitely if all of the following conditions are met

You must meet ALL of the conditions, not just one.
To meet "wants you to relocate"....usually the employer pays for your to moving cost. I think this is good evidence of "wants you to move".
You could live on the border of Ottawa and Gatineau and only move two blocks so "same province" not that relevant...I would use the "at least 40km" criteria that CRA uses for the moving expenses deduction.

Caveat on all of the above....seek good tax advisor for advice/filing when dealing with big money decisions/issues.



https://www.canada.ca/en/revenue-agency ... perty.html

Changing all your principal residence to a rental or business property

When you change your principal residence to an income producing use such as a rental or business property, you can make an election not to be considered as having started to use your principal residence as a rental or business property. This means, if you make this election, you do not have to report any capital gain when you change its use. However:

you have to report the net rental or business income you earn; and
you cannot claim capital cost allowance (CCA) on the property.
While your election is in effect, you can designate the property as your principal residence for up to four years, even if you do not use your property as your principal residence. However, during those years:

you cannot designate any other property as your principal residence; and
you must be a resident or deemed to be a resident of Canada.
You can extend the four year limit indefinitely if all of the following conditions are met:

You live away from your principal residence because your employer, or your spouse's or common-law partner's employer, wants you to relocate.
You and your spouse or common-law partner are not related to the employer.
You return to your original home while you or your spouse or common-law partner are still with the same employer, or before the end of the year following the year in which this employment ends, or you die during the term of employment.
Your original home is at least 40 kilometres (by the shortest public route) farther than your temporary residence from your, or your spouse's or common-law partner's, new place of employment.
If you make this election, there is no immediate effect on your income tax situation when you move back into your residence. However, if you change the use of the property again and do not make this election again, any gain you have from selling the property may be subject to tax.

To make this election, attach a letter signed by you to your income tax and benefit return of the year in which the change of use occurs. Describe the property and state that you want subsection 45(2) of the Income Tax Act to apply. If you started to use your principal residence as a rental or business property in the year, you may want information on how you should report your business or property income. If so, see the T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income guide or the T4036, Rental Income guide.
Thanks - yes the link was messed up. So I suppose the 40km is good enough to determine "relocation"
Sr. Member
Nov 12, 2014
775 posts
520 upvotes
Kingston, ON
Ask an accountant.....
[OP]
Sr. Member
Jun 18, 2018
585 posts
285 upvotes
Toronto
QN5252 wrote:
Dec 26th, 2018 5:34 pm
Ask an accountant.....
Well there are accountants who browse and post on these forums so it was worth a try. Plus, others could have already gone through this and would know the answer as well.

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