CRA considers that installing interior access to the other unit in a duplex occupied by an elderly parent, who shares meals, does not make the whole a principal residence

CRA considers that in order for a duplex to be considered a single housing unit for principal residence purposes, the two units must be “sufficiently integrated so that it is not possible to live normally in the living areas of one of the units without also having access to the other unit in order to use its facilities.” CRA did consider this test to be satisfied where an individual purchases a duplex to support and provide care to an elderly parent, renovates it so that a door now provides interior access between the two units, and with the parent sharing most meals with the child and the child’s family. Thus, on resale, the child could claim the principal residence exemption only on the child’s unit and not the other. However, if the facts were the same except that the elderly parent was the owner, the parent could choose which of the two units to treat as a principal residence.

Neal Armstrong. Summary of 21 January 2016 Ordre des CPA du Québec Roundtable on Personal Taxation, Q. 9, 2016-0625141C6 Tr under s. 54 - principal residence.