A taxpayer acquired a cottage and the subjacent land in 1998, and ordinarily inhabited the cottage until 2002, when he demolished it and built a new one, which he continued to ordinarily inhabit until its sale some years later. Can he include the years of occupation of the first building in the exemption formula? CRA responded:
[T]he land could be designated as a principal residence for the taxation years in which the taxpayer ordinarily inhabited the first cottage as well as the second cottage. Consequently, if all the conditions for designating a property as a principal residence are met, we are of the view that the number of years the taxpayer ordinarily inhabited both the first cottage and the second cottage could be included in the description of B in the formula ... .