The taxpayer and his wife purchased a bungalow for their daughter, who was a single parent with a low income, with her staying there and being charged rents to cover maintenance, insurance, municipal and school taxes and mortgage interest. As there is no intention to profit from the rent, it will decrease as the mortgage is repaid. The daughter will receive the house ownership as an inheritance.
After finding that the rent was not required to be included in their income, as there was no source of income, CRA went on to state:
[W]hen disposing of a rental property … you may be able to take advantage of the principal residence exemption when disposing of the residence if the property is used as a principal residence. However, it should be noted that a taxpayer may only designate one residence per family (i.e. you and your spouse) per year if the property meets the principal residence criteria.