Co-owning a home in Canada: can each owner claim the principal residence exemption?
This answer covers Canadian federal tax law, which applies in every province.
Yes, each co-owner can claim the principal residence exemption on their own share, but only if that owner meets the conditions. Co-ownership counts as ownership, including joint tenancy and tenancy-in-common. Each co-owner reports their own share on their own return and makes a separate designation.
The home must also be ordinarily inhabited in the year by that owner, or by their spouse or common-law partner, former spouse or partner, or child. A co-owner who does not live there, such as an adult child on title for a parent, cannot designate it unless one of those people did. Each owner can designate only if no other property is designated for their family unit that year.
You make the designation on Schedule 3 and Form T2091(IND), and you must report the sale even if the whole gain is exempt. Where a share was not a principal residence for every year, a formula sets the exempt part, and it includes an extra year that can exempt the whole gain when only one year is missed. That extra year is not available if you were not a Canadian resident in the year you bought the new property. A loss on a home cannot be claimed because it is personal-use property.
Key takeaways
- Co-ownership counts as ownership, and each co-owner reports their own share and designates separately on their own return.
- A co-owner who does not live in the home, such as an adult child on title for a parent, cannot designate it unless a qualifying person ordinarily inhabited it in the year.
- Each owner can designate only if no other property is designated for their family unit that year.
- You must report the sale even if the gain is fully exempt, and a loss on the home cannot be claimed.