Can a non-resident of Canada claim the principal residence exemption on a home they used to live in?

The principal residence exemption shelters capital gains on the sale of a home that you designated as your principal residence. A non-resident can claim the exemption, but only for years in which they were a Canadian resident AND ordinarily inhabited the property. Years of non-residence do not count toward the exemption.

This means that if you lived in an Ontario home for several years as a resident, then moved abroad and rented it out, your gain on sale must be split: the portion attributable to the years you were a resident and using it as a principal residence can be sheltered; the portion attributable to non-resident years is taxable (subject to treaty relief).

A change-in-use election is available when you first move out and convert the home to a rental — it lets you elect to defer the deemed disposition on the conversion date. This is complex planning that should be done with a tax professional before you leave. Retroactive elections can sometimes be filed, but within time limits.