13 June 1996 External T.I. 9611935 - PRINCIPAL RESIDENCE EXEMPTION

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

An individual co-owns a residence in B.C. with his parents. In 1994 the individual moved to Ontario in connection with a employment position. Can the individual be considered to "ordinarily inhabit" the residence for 1994 and subsequent years?

Position:

Yes, for 1994. It is our general view that the individual would not be able to designate the residence for 1995 and later years unless it is occupied for a short time as set out in paragraph 12 of IT-120R4. Occasional visits by the individual to see the parents would not result in the individual being considered to have ordinarily inhabited the housing unit.

Reasons:

The only circumstances under which the B.C. residence could qualify as the individual's principal residence would be if it were the individual's seasonal residence.

		961193
XXXXXXXXXX	M. Eisner

June 13, 1996

Dear XXXXXXXXXX:

Re: Principal Residence

This is in reply to your letter of April 2, 1996, in which you asked about the principal residence exemption.

You have indicated that you and your parents co-own a residence in British Columbia (B.C). Prior to November 1994, you were a student. However, in November 1994, you moved to a location in Ontario in connection with an employment position. The B.C. residence was not rented following the move as your parents continued to occupy the residence.

Our Comments

Your concern about the status of the B.C. property as your principal residence arises because of your move to Ontario, as you no longer permanently live at the residence in B.C.

In order for a property to qualify as a taxpayer's principal residence for any particular taxation year, the requirements in the definition of "principal residence" in section 54 of the Income Tax Act must all be satisfied. One of these requirements is that the housing unit must be "ordinarily inhabited" in the taxation year by the taxpayer or by the spouse, former spouse or a child of the taxpayer. For more information on the meaning of "ordinarily inhabited," please refer to paragraph 12 of the enclosed Interpretation Bulletin IT-120R4.

Because you lived in the B.C. residence during most of 1994, you would be considered to have satisfied the "ordinarily inhabited" requirement for that year. Whether or not you can be considered to have "ordinarily inhabited" the B.C. residence in 1995 or a subsequent year is a question of fact which can only be definitely determined upon a review of all the facts and circumstances surrounding your case. Generally, however, it is our opinion that you will not be able to designate the B.C. property as your principal residence for 1995 and later years when you are employed and living in Ontario unless it is occupied for a short period of time in the year, as set out in the example (seasonal residence) in paragraph 12 of IT-120R4. Further, it is our opinion that occasional short visits to your parents would not result in you ordinarily inhabiting the housing unit in the year.

As you have all the relevant information with respect to 1995, you may wish to contact your local tax services office for further assistance concerning the question of whether you would be considered to have satisfied the "ordinarily inhabited" requirement for that year.

We trust our comments will be of assistance to you.

Yours truly,

John F. Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch