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If someone rents out his principal residence, he can elect to keep it as his principal residence for up to four years under Subsection 45 (2) of the income tax act. According to the paragraph below
"While your election is in effect, you can designate the property as your principal residence for up to four years, even if you do not use your property as your principal residence. However, during those years:
you cannot designate any other property as your principal residence; and
you must be a resident or deemed to be a resident of Canada."
1.What if someone is a factual resident ( leaves Canada to attend school abroad while maintaining his/her residential ties :Bank accounts, Driver License, Health card), can he still make this election since factual residents are treated the same as residents for tax purposes (They both pay tax on their worldwide income)
2. What if the property is jointly owned with a non resident for tax purposes who has filed a departure tax return. In other words, can one owner (the factual resident) designate the rental property as his principal residence, while the other owner (the non resident) files a departure tax and gets a principal residence exemption on capital gains (disposing of her principal residence)?
Thank you
Hi Ahmed, if you are a factual resident of Canada, then you are eligible to elect under subsection 45(2) of the income tax act. If you are a factual resident and a co-owner of a Canadian property, while the other co-owner is a non-resident, you can elect to treaty your share of the property as your principal residence pursuant to subsection 45(2) of the income tax act.