Purchasing a Primary Residence: Principal Residence Exemption Explained
by Kent Braaten
on Tuesday, February 9th, 2021 at 7:30am.
It’s easy to see why purchasing a primary residence is a strong investment strategy. It’s as simple as paying equity on your own home and increasing your net worth versus doing the same for your landlord. But did you know that Canadians also have the added benefit of the Canadian Principal Residence Exemption, making purchasing a primary residence a great first step to investing in real estate?
What is a Principal Residence?
The Canada Revenue Agency (CRA) states that any residential property owned and occupied by you or your family at any time in a given year could be designated as a principal residence. Your principal residence can by any of the following types of housing units:
Apartment in apartment building or duplex
The CRA allows you to not pay taxes on the sale of a principal residence when there are profits earned. This means that designating a property as a principal residence is a significant and important financial planning tool!