Real Estate

Principal residence exemption on rental property?

  • Last Updated:
  • Apr 6th, 2019 6:02 pm
[OP]
Sr. Member
Jan 17, 2009
740 posts
374 upvotes
Toronto

Principal residence exemption on rental property?

Hi,

If I were to buy a house (my only property), but rent it out, would I still have the PRE?

Technically speaking, and practically speaking, would the CRA find out?
17 replies
Newbie
Feb 25, 2015
59 posts
19 upvotes
Vancouver, BC
You could get away with it if you don't report the rental income and self manage it.
Deal Addict
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Dec 13, 2016
3704 posts
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sauderite wrote: You could get away with it if you don't report the rental income and self manage it.
And where is he going to live? Where will his health card and driver's license be mailed to?
Deal Addict
Aug 30, 2011
3461 posts
1221 upvotes
Ottawa
Please posters, don't encourage tax fraud.

OP, it must have been your principal residence. You cannot claim a property as a principal residence if it never was. Even if it your only property.
Deal Addict
Mar 3, 2018
1988 posts
1993 upvotes
GTA
Move into the house short term like a few months. Change all addresses like bank and drivers licence. Then make a tax election S. 45(2) not to be considered as having started to use your principal residence as a rental property. This election would be good for at least four years. You would then be able to claim the property in those four years as your principal residence while it is rented.
Deal Expert
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Aug 2, 2010
15193 posts
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Here 'n There
sauderite wrote: You could get away with it if you don't report the rental income and self manage it.
Trite to say if you want to commit FRAUD, you can do anything you want...

until you get caught!
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Aug 2, 2010
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xerane wrote: Hi,

If I were to buy a house (my only property), but rent it out, would I still have the PRE?

Technically speaking, and practically speaking, would the CRA find out?
Um, there's a reason its called 'Principle residence exemption', duh.

I hope you get caught because you are clearly contemplating committing FRAUD because you are wondering if 'the CRA will find out'.
Deal Addict
Oct 13, 2014
2186 posts
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Just Moved To Somewh…
@xerane And what will be your answer to the CRA when your tenants file their BEN (ONT) forms for the rent they paid you?
“Before one can have a Clue they must first accumulate 10 Inklings. That said, all it takes is one bad post and you erase all Inklings & Clues accumulated'"
Deal Expert
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Aug 2, 2010
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rcmpvet wrote: @xerane And what will be your answer to the CRA when your tenants file their BEN (ONT) forms for the rent they paid you?
That RFD made him commit the fraud, lol.
Deal Addict
Aug 30, 2011
3461 posts
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Ottawa
xerane wrote: Thanks, I think this is exactly what I was looking for.
You do understand that you'll need to live there at least for awhile, and actually make it your principal residence, right? The exemption does not apply with the scenario you told us.
[OP]
Sr. Member
Jan 17, 2009
740 posts
374 upvotes
Toronto
DaveTheDude wrote: Move into the house short term like a few months. Change all addresses like bank and drivers licence. Then make a tax election S. 45(2) not to be considered as having started to use your principal residence as a rental property. This election would be good for at least four years. You would then be able to claim the property in those four years as your principal residence while it is rented.
Is living in the house short-term necessary? Is it so you can initially designate it as your primary residence?
[OP]
Sr. Member
Jan 17, 2009
740 posts
374 upvotes
Toronto
OttawaGardener wrote: You do understand that you'll need to live there at least for awhile, and actually make it your principal residence, right? The exemption does not apply with the scenario you told us.
I see, that is helpful to know. Thanks! Not sure why some commentors are so hostile, lol...
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xerane wrote: I see, that is helpful to know. Thanks! Not sure why some commentors are so hostile, lol...
Well, I dunno about you, and maybe it's just me, but someone admitting on here they want to commit fraud and others encouraging them = Not good!
[OP]
Sr. Member
Jan 17, 2009
740 posts
374 upvotes
Toronto
eonibm wrote: Well, I dunno about you, and maybe it's just me, but someone admitting on here they want to commit fraud and others encouraging them = Not good!
When did I ever say I was going to commit fraud? I was asking for an explanation of the rules as I am not a tax professional.
Deal Addict
Feb 19, 2019
1133 posts
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Stouffville ON
xerane wrote: Is living in the house short-term necessary? Is it so you can initially designate it as your primary residence?
Yes, living there is necessary in order to qualify as primary residence. You don’t have to live there all the time, but you (your spouse or your children) live there at some point of time during the year.

Here is a link to good article on the subject.

https://www.taxtips.ca/filing/principalresidence.htm
Full Time and Full Service Realtor
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xerane wrote: When did I ever say I was going to commit fraud? I was asking for an explanation of the rules as I am not a tax professional.
Lets see, you wouldn't have asked
xerane wrote: would the CRA find out?
if you had nothing to hide now would you? Your made your intention insanely clear right off the bat. Doesn't take a rocket scientist to see that.

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