A Toronto resident owns two properties: their principal residence worth $800,000 (purchased for $400,000) and a cottage worth $500,000 (purchased for $300,000). If they sell both properties in the same year, what is their total taxable capital gain?
Correct Answer
A) $100,000
The principal residence has a $400,000 capital gain but is exempt from tax due to the principal residence exemption. The cottage has a $200,000 capital gain, of which 50% ($100,000) is taxable. Only one property per family can claim the principal residence exemption per year.
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A taxpayer owns two properties: their principal residence worth $800,000 and a cottage worth $600,000, both purchased for $400,000 each. If they must sell both properties in the same year, what is the optimal tax strategy?
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