Personal Tax

Changes coming to Principal Residence Exemption

The Financial Post has just reported on the Liberal Government of Canada looking at changes to the Principal Residence Exemption (PRE) for home owners.

The existing rules around the PRE are that every Canadian is allowed one PRE claim for each tax year (married and common law couples share a PRE claim), meaning if you own two homes, only one of the homes is covered by the PRE related to the growth in the value of the home.  

Coming in 2022, additional restrictions are being put in place to claim this exemption:


1) You must own the residence a minimum of 12 months from the date of purchase*

* Exception will exist for cases where the home sale is out of the control of the taxpayer like homes destroyed, condemned or damaged or deaths, divorces, separations, serious illness/injury or a change in employment.

2) You must have purchased the home with the purpose of living in it NOT for the purpose of resale*

* This is can be evident from your history of home purchases - an example used where it was disallowed is a realtor who had built and sold 3 houses over a relatively short period of time (claiming the PRE on each sale)

The factors the CRA will consider are:

  • the nature of the property sold.
  • the length of the period of ownership.
  • the frequency or number of similar transactions.
  • work expended on or in connection with the property.
  • the circumstances that were responsible for the sale of the property; and
  • motive for selling the property.

If you are unsure as to if you will be affected by the coming changes to the PRE, please feel free to contact us at or 250-729-7940