Fortunately this amount will not become taxable but is for reporting only based on the designation you apply to the property. Form T2091 Designation of a Property as a Principal Residence requires you to make a declaration from one of three choices.
- Designate as your principal residence for all years owned or;
- Designate as your principal residence for some, but not all, years owned or;
- Designate multiple properties to have been your principal residence(s) for some or all of the years owned.
In Canada, the gain on principal residences is exempt from income taxes in most cases. Taxation will come into effect when more than one personal property is owned at the same time, such as a residence and a cottage, or if you are not a resident of Canada.