Filling out T2091 when change of use from rental to principle residence

TaxCat · ‎February 27, 2024

Fact:

I bought a property A in 2015, and I have lived there until Aug 2016 before I rented it out. I recently sold my principle residence B and I moved back to my rental property A in 2023.

Question:

I am preparing my return for 2023. I filled out Schedule 3 and selected option 2 on line 17900. I have also filled out T2091 Section 1 and 2. I am planning to elect S.45(3) for this change, but T2091 is proposing a capital gain on the former rental property A. Did I do something wrong or what should I do so the capital gain can be deferred?

Mario B · ‎February 28, 2024

This form is supposed to be filled out every tax year that there is a change in use, as I understand the rules from CRA.

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-re...

TaxCat · ‎February 29, 2024

Do you know how should I wipe out the capital gain if I need to fill out the T2091? Do I override the capital gain line with $0, and send in an election letter at the same time?

ProFile Duncan · ‎March 01, 2024

Hi,

I think you need to do some research. The subsection 45(3) election is made at the time of the change to extend the principal residence status, see link. Also if Property B was sold are you reporting that also? Remember you can only have one principal residence per year.

mlaracy · ‎March 05, 2024

The only property that was disposed of was A, so you should be choosing option 1 not 2 and only putting that information in the t2091 and S3 that pertains to property A.

You need to elect under S45 but this is just a letter that you send into CRA, property B does not go anywhere on these schedules as you have not disposed of it.