a house inhabited by a son may still qualify as a principal residence

In a July 9, 2014 French Technical Interpretation (2014-0527591E5, Lacharité, Johanne), CRA reviewed a situation where a father leased his house to his son, as well as others who are not related to him or the son.  CRA noted that at least a portion of the house is “ordinarily inhabited” by the son and, therefore, may qualify as a principal residence for the father (Section 54 - “Principal Residence”).

If this is the main use of the dwelling and the property is primarily used as a principal residence and serves only as an accessory to produce income; no structural changes are made to the property; and no capital cost allowance (CCA) has been requested in respect of the property; it could fully qualify as a principal residence for purposes of the principal residence exemption.  CRA noted that a residence rented in whole, or in part, may still qualify.

CRA also noted that designating the rental property leased to the son as a principal residence will affect the father’s calculation of the principal residence exemption on his own residence.

See CRA Folio S1-F3-C2, Principal Residence, for more details.