The taxpayer lived with his spouse in Immovables A, but thereafter commenced to live separate and apart from her, but did not divorce from her, and instead lived in a conjugal relationship with another (a common-law partner) in Immovable B until his death. On his death, Immovable A and Immovable B were devised on a s. 70(6)(a) rollover basis to his spouse and common-law partner, respectively, who thereafter ordinarily inhabited the respective Immovable until its sale.
On such the subsequent sale of Immovables A and B by the spouse and common-law partner, will the spouse and common-law partner be able to designate their property as their principal residence on the assumption that they will have, respectively, ordinarily inhabited their respective immovables throughout the period during which the taxpayer owned them and thereafter until the time of the sale?
Respecting the spouse, the Directorate noted that she could designate Immovable A as her principal residence for the pre-death period, as could the common-law partner, but went on to state:
If during [that period], the taxpayer had a spouse (with whom he was living separate and apart) and a common-law partner, only one of the two properties could have been designated as the taxpayer's principal residence for each of the taxation years in that period and have been deemed to be the principal residence of either the spouse or the common-law partner under subparagraph 40(4)(b)(i).