A married couple owns two properties: their principal residence worth $600,000 and a cottage worth $400,000. If both properties have appreciated equally over 10 years and they sell the cottage, what tax planning strategy should they consider?
Correct Answer
A) Designate the cottage as their principal residence for some years to reduce capital gains
The couple can strategically designate the cottage as their principal residence for some of the ownership years to minimize capital gains tax. The principal residence exemption can be allocated to either property for any given year, allowing them to optimize their tax situation.
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Previous Question
A married couple owns two homes: one in Edmonton (purchased 2015) and one in Vancouver (purchased 2020). They want to minimize capital gains tax when selling one property. What should they consider?
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A married couple owns two properties: their principal residence worth $800,000 and a cottage worth $400,000. They have designated their principal residence appropriately. If they sell both properties in the same year for gains of $200,000 and $100,000 respectively, what is their total taxable capital gain?