How long after a sale do I have to declare a house to be the principal residence? I am selling my house later this year and will be selling my cottage in several years. I know fairly precisely how much I will be able to sell my house for but not so for the cottage as it may go up or down quite significantly in 3 years. >From a capital gains perspective I would like to delay making the declaration until after I sell the cottage. Many thanks. --------------------------------- david ingram replies: If you sold it on Dec 20th, you would be claiming it as your principal residence (CRA form T2091) on your 2005 return in April. >From the moment you sell, any future gains in the cottage will be tax free assuming you do not buy another house right away. Looking at form T2091 will show you that you will then owe tax on any gain from the day you bought the cottage until the day you sold the house. This assumes that you already had a house or a different house as a principal residence at the time you bought the cottage. Another possibility is that your waterfront Saltspring Island cottage has gone up more in value than your 3 bedroom townhouse in Chilliwack. If that is the case, you would elect to pay tax NOW on the sale of the townhouse and claim the cottage as your tax free home. You likely need to sit down with someone like us to get it straight. You are talking about thousands of dollars in tax. And your case is not unusual at all. I just finished helping someone decide whether the waterfront cottage, the Vancouver house or the Whistler ski chalet made the most sense (and thousands of dollars) to be the principal residence for tax purposes. This one was further complicated because they were moving back to the USA and subject to US tax on any Canadian profit on their house over about $600,000 and all three were close to that profit. I would charge a minimum of $428 for that consultation in person or by phone. david Answers to this and other similar questions can be obtained free on Air every Sunday morning. Every Sunday at 9:00 AM on 600AM in Vancouver, I, david ingram am a permanent guest on Fred Snyder of Dundee Wealth Managers' LIVE talk show called "ITS YOUR MONEY" Those outside of the Lower Mainland will be able to listen on the internet at www.600AM.com <http://www.600am.com/> Call (604) 280-0600 to have your question answered. BC listeners can also call 1-866-778-0600. Callers to the show and questioners on this board can also attend the Thursday Night seminars on finance and making your Canadian Mortgage Interest deductible. David Ingram's US/Canada Services US / Canada / Mexico tax, Immigration and working Visa Specialists US / Canada Real Estate Specialists Home office at: 4466 Prospect Road North Vancouver, BC, CANADA, V7N 3L7 Cell (604) 657-8451 - (604) 980-0321 Fax (604) 980-0325 Calls welcomed from 9 AM to 9 PM 7 days a week (please do not fax or phone outside of those hours as this is a home office) email to taxman at centa.com <mailto:taxman at centa.com> www.centa.com <http://www.centa.com/> www.david-ingram.com <http://www.david-ingram.com/> Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. 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