Can a husband buy a house in his name, a wife buy a cottage in her name, and have both exempt from capital gains by claiming separate principal residences?—Ed Vandersterre, via email
Not unless they go back in time. (Quick, to the DeLorean!) Before 1981, it was possible to do that, says Karen Slezak, a partner with the tax group at Crowe Soberman in Toronto. “Both of the spouses had their own principal residence exemptions, allowing them to make two claims if they separated the ownership of the house and the cottage.” But then the government changed the rules. As it does sometimes. “Now, the exemption is only available to a ‘family unit,’ ” says Slezak. This includes spouses and children who are minors. “Consequently, if a property is designated by anyone in the family unit (for example, the husband) as a principal residence, it means that everyone is considered to have used the exemption for the designated years.”
Where you’re going, you don’t need roads. But you may need tax advice. To learn more about the principal residence exemption and how it applies to cottages, see Cottage Q&A, Spring ’17. And for expert advice on estate planning, handing down the cottage, and the tax implications that come with it, sign up for our newsletter series, Family Matters—it’ll walk you through the basics.
Got a question for Cottage Q&A? Send it to answers@cottagelife.com.
This article was originally published in the May 2025 issue of Cottage Life.
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