Salama – Court of Quebec finds that the principal residence exemption was available for the whole of a duplex

The ARQ took the position that a duplex sold by the taxpayer consisted of two distinct units – the second storey, occupied by her and her son, and the ground floor (with a separate municipal address) occupied (with its own kitchen, bathroom etc.) by her mother – so that she was only entitled to the principal residence exemption on half the gain.

Davignon JCQ acknowledged that there was some support for the ARQ position in the jurisprudence, under which "housing unit" [logement] has generally been interpreted “as being a self-contained living space, including all the amenities normally associated with it, namely a sleeping area, a kitchen and a bathroom” so that the courts “have generally held that only one separate self-contained dwelling unit in the same building can come within this definition.”

However, before granting full exemption to the taxpayer, he found on the evidence that in fact the taxpayer had occupied the entire duplex as the residence of her and her son, stating:

Mrs. Salama's daily life was not separated from that of her mother and in fact, she lived in the entire building. For all practical purposes, she ate all her meals with her mother and son on the first floor. The three of them lived together and even when she or her son had friends over, it was no different.

Neal Armstrong. Summary of Salama v. Agence du revenu du Québec, 2022 QCCQ 718 under s. 54 – principal residence.