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Looking To Rent Out a Room in Your House?

Renting your home, Jamie Golombek

Renting out a part of a principal home could limit the availability of the principal residence exemption (PRE)1 when a home is sold.

According to Jamie Golombek, "The tax rules state that if you change the use of a property, you are 'deemed' to have disposed of the property at its fair market value and to have immediately reacquired the property for the same amount."

Fortunately, if homeowners meet three conditions, the CRA will consider the home's use as unchanged:

  • The rental use of the property is “ancillary” in relation to its use as a principal residence.
  • No “structural changes” were made to the property.
  • Tax depreciation was not deducted on the portion of the home rented.
Learn more

1The PRE is an income tax benefit that generally provides you an exemption from tax on the capital gain realized when you sell the property that is your principal residence (Reporting the sale of your principal residence for individuals (other than trusts) - Canada.ca)
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