Victoria has only owned two homes. She sold her cottage in Oshawa, Ontario for $225,000 on February 16, 2020. The cottage was inherited from her mother Caroline in 2012, which at the time had a fair market value (FMV) of $60,000. The only other residence Victoria has ever owned was her house in Barrie, Ontario, which she owned from 2009 to 2014. While the house did have a capital gain at the time of disposition, she did not pay any income tax on the house due to the principal residence exemption. Assume she is a Canadian resident throughout. Round to nearest dollar.

Required: 

a) Determine which years Victoria has designated the house and cottage as her principal residence in the manner of most benefit to her and briefly explain why. (2 marks)

 

b) Calculate the minimum taxable capital gain that Victoria must report on her 2020 tax return in respect of the sale of the cottage. (3 marks)

suggested time - 15 minutes

Answer rating: 100% (QA)

Victorias Principal Residence and Capital Gain Calculation a Designation of Principal Residences To ... View the full answer