How do we designate the cottage as our “principal residence”? —Caleigh MacMillan, Kawartha Lakes, Ont.
It’s a matter of filing the appropriate form through the Canada Revenue Agency (see the form Designation of a Property as a Principal Residence by an Individual. But keep in mind that you don’t need to do this unless you’re reporting a capital gain because the cottage has changed ownership—for example, if it’s been sold to a third party, or if it’s been gifted from a parent to a child. Also, you don’t file this form beforehand, you file it in the year after the disposition of the property, when or if you’re reporting a capital gain for that tax year. For more on all of this, check out the CRA’s info on capital gains and principal residence. It’s not what anyone would call a gripping read…but it is valuable.
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