I’m seeing mixed direction on this in various places. If someone lives in a property as their princ res for 2 years and then starts renting it out - let’s assume they go live with family with intent on moving back. They correctly file a 45(2) change in use. My understanding is that no T2091 is needed to be completed at change in use time correct? CRA will reply and confirm receipt of the election.
The realtor value opinion letter is obtained and filed away for future reference.
Does the advice change to the above if they buy another property and move into that other one right after versus living with family for a few years?
You are correct, no T2091 necessary. File the election and move on, the cost basis is irrelevant because no change of use was deemed to have occurred as long as the election was filed.
If the client purchases another property, keep in mind that they can only have 1 principle residence at a time. So you will need weigh the consequences of subjectivity to capital gains tax considerations … whether they report a deemed disposition on the rental property, or report a potential prorated future capital gain on the disposition of their current residence that is not currently their principle residence.
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Thank you, this makes sense, appreciate the reply!
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