Principal Residence Designation/Change

A couple of questions regarding my brother’s estate (he passed away a year ago) that I am now administering.

He had an acreage which originally contained his residence, which burned to the ground, almost 4 years ago, uninsured, so he was unable to rebuild. He then rented an apartment in the town about 10 kms away, and his last 3 years, he claimed rental payments for the property tax credit on his annual tax return. By doing that, would he have made his acreage be subject to capital gains during that period? The acreage has just been sold, earlier this week.

The acreage has a few outbuildings, including garages and a bunkhouse, so I think it could qualify in it’s current state since the fire as a principal residence. Is it possible that as administrator, I could revise his past 3 tax returns to show paying property tax on the acreage to indicate it as his principal residence? I doubt it would make any, or at the very most, a very small difference in any of those 3 previous returns.

I would suggest that you need professional, paid, tax counsel. The situation is a unique one, and you have left many questions unanswered in my mind. An internet forum is really not the appropriate place for this kind of detailed query, even one where pros are in attendance.

Assuming you are indeed, the Executor, you are personally liable for decisions made. Think upon that rather carefully.

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This sounds too complicated to answer in a Forum. Please find a local accountant to help you with this. As SmallBizGuy stated, you are personally liable, which means there are risks involved.

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@pillar This is a complicated one even for professionals. I wouldn’t revise previous returns. Start here and pay attention to the excess land portion. But definitely seek professional advice as they could potentially save the estate thousands and more importantly mitigate your risk as the executor.

Income Tax Folio S1-F3-C2, Principal Residence - Canada.ca