Designation of Property as a Principal Residence
If you disposed of (sold, transferred, gave, bequeathed, etc.) a property that you want to designate as your principal residence, file form TP-274-V, Designation of Property as a Principal Residence, to avoid having all or a portion of any profit considered a taxable capital gain.
You do not have to calculate any capital gain if you elect to designate your residence as your principal residence for all the years you owned or co-owned it. However, if you do not designate it as such for all the years you owned it, you may have to report a portion of the capital gain. In all cases, you must complete form TP-274-V, Designation of Property as a Principal Residence, and enclose it with your income tax return for the year in which you:
- disposed of or are deemed to have disposed of all or part of your principal residence;
- granted an option to purchase all or part of your principal residence; or
- granted a real servitude encumbering your principal residence.
If you designate a property as your principal residence for one or more years during which you owned or co-owned it, you must provide proof that you made such a designation with the Canada Revenue Agency for those years.
See Elections filed with the Canada Revenue Agency (CRA) at Penalty for Failure to File for information about the deadlines for sending us a copy of the documents you sent the CRA and the late-filing penalties.
You may designate a property as your principal residence for a year only if you, your spouse, your former spouse or your child ordinarily used the property as a housing unit during that year.
You must also meet the following conditions:
- You own the property, alone or jointly with another person.
- You are designating no other property as your principal residence for the year.
- For years after 1981, no other property may be designated as a principal residence for the year by:
- your spouse (unless he or she lived apart from you throughout the year, pursuant to a judicial separation or a written separation agreement);
- your child, unless, during the year, he or she had a spouse or was aged 18 or over;
- your father or mother, or your brother or sister (unless, during the year, your brother or sister had a spouse or was aged 18 or over), if you yourself did not have a spouse and were not aged 18 or over during the year.
- For a year ending after October 2, 2016, you designated the property as your principal residence with the Canada Revenue Agency for that year.
For more information on which type of property may be designated as a principal residence, the conditions for designating a principal residence, the change in use of a principal residence or the concepts of "proceeds of disposition" and "adjusted cost base," consult the section of the guide Capital Gains and Losses (IN-120-V) dealing with a principal residence.