An individual and her husband, both Canadian residents, did not travel in 2020 and 2021 to the country where the individual’s townhouse was located due to COVID-19 travel restrictions. The townhouse was not inhabited during those two years. Could the principal residence exemption be claimed for those years following its sale in 2023?
After noting that property located outside Canada can potentially qualify as a taxpayer’s principal residence, and that “[e]ven if a person inhabits a housing unit only for a short period of time in the year, this may be sufficient for the housing unit to be considered ordinarily inhabited in the year by that person,” CRA stated:
Notwithstanding that travel guidance and travel restrictions of varying degrees were in effect during the COVID-19 pandemic, for a property to qualify as a taxpayer’s principal residence as defined in section 54 of the Act for the year, the condition that the property be ordinarily inhabited by the individual, the individual’s spouse, common-law partner, former spouse, former common-law partner or child in the year is still required to be met.