What is a Principal Residence for Tax Purposes?

With the Senate scandal dominating the news, the issue of what is a principal residence for tax purposes seems an appropriate question.

First the property must be owned by the taxpayer alone or jointly with another person. The property must also be “ordinarily inhabited” by the taxpayer or by his or her spouse or common-law partner, former spouse or common–law partner, or child. This is a question of fact and the number of days in the year that one must so ordinarily inhabit is not defined. Short periods of residency qualify, according to CRA, for example, if you acquire and then inhabit your residence late in the year, or in the case of a seasonal residence, you occupy it only during vacations, all provided that the main reason for owning the property is not to gain or produce income.

Since 1981, only one property per family unit can be designated as the principal residence for a particular taxation year.