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Hey my name is steve parr and today we are going to talk about the principal residence exemptions so the principal residence exemption allows you to sell a property and not pay any tax on it so the capital gain that you would normally accrue from the sale of that property doesn't apply and so this video we want to cover off some of the uh nuances of that and ensure that if you are thinking about making use of the principalities exemption that you are doing it properly so the first thing you want to keep in mind is that the exemption needs to be reported so since 2022 the cra has required that uh this exemption be reported on your personal income tax return so you want to make sure that you're working with your accountant to ensure that that is done and the second criteria is that resonance exemption is only going to apply to a property that you actually live in so a property the cra uses the term ordinarily inhabited so while there's not a specific set number of days that the cra sets out that you are actually resident inside of the home it is the cra if they assess uh and and look in deeper into whether the exemption actually applies or not they're gonna look at things like the length the amount of time that you are in the property they're going to look at your sources of income uh whether the whether the real estate sale was done as a part of another series of transactions so such as a like a real estate flipping venture so you want to ensure that uh that that the narrative that is behind the the sale of the property is is compliant with what the cra understands uh a principal residence exemption to apply for so the third piece is that if you are using your property to generate income um that is like through a long-term or short-term rental in general it's not going to qualify for the principal residence exemption so that is a different type of use of property termed an investment property and if it is if it's an investment property then it just doesn't qualify for it however there are some exceptions and principal residents can still meet that criteria if you are renting out for a very short period of time so perhaps you have a a summer cottage that you're just renting out for a couple of weeks a year uh on airbnb or another short-term rental site um that generally will be okay but you're going to want to check with your tax advisor before you confirm on that so the the last point that i want to bring up is that it's the principal residence exemption only applies on 1.2 acres of land so if you have a large property uh then it is not going to qualify for the principal residence exemption ...