Royer – Court of Quebec finds that the principal residence did not include the portion thereof occupied by the grandmother performing an essential care function
Similarly to the federal principal residence exemption, the Quebec exemption requires that “the housing unit is ordinarily inhabited in the year by the individual, his spouse or former spouse or his child.” The house of the taxpayers (a couple with two children, one of them disabled) had a basement apartment that was occupied by the grandmother in order to enable her to take care of the disabled child on a full-time basis. Boutin JCQ found that, because the rest of the family essentially did not use this basement apartment (it was almost exclusively the private quarters of the grandmother), the portion of the capital gain realized by the couple on the sale of their house that was allocated by the ARQ to the basement apartment was not eligible for the exemption.
A second issue related to the fact that, on the sale, the taxpayers were granted a usufruct by the purchaser, which permitted them to continue using the residence for nine years, and with somewhat under half of the purchase price not coming due until this usufruct expired. Boutin JCQ rejected the taxpayers’ argument that because they had this usufruct following the sale, therefore they had not yet disposed of the property.