Does the principal residence exemption cover the whole gain when I sell my Ontario home?

Often yes: if the home was your principal residence for every year you owned it, you usually pay no tax on the gain because of the principal residence exemption. A home qualifies for a year only if it is a housing unit, you own it alone or jointly, you or certain family members lived in it at some time during the year, and you designate it. Houses, cottages, condominiums and mobile homes can all qualify.

If the home was not your principal residence for every year, only part of the gain is exempt, using gain × (designated years + 1) ÷ years owned. For 1982 and later years, a family can designate only one home per year, which matters if you also own a cottage. When you sell, you report the sale on Schedule 3 and complete Form T2091(IND).

Renting out part of the home can split the sale between the two uses. Selling a home owned for less than 365 consecutive days can make it a flipped property with no exemption, unless a life-event exception applies. An accountant or lawyer can confirm your situation.