I have a couple that has built a cottage in 2016. As well they have owned a house since 1971. they sold the cottage for 770,000 in 2023. They put about 420, 000 into the cottage building it. So looks like a healthy gain on it. They have shared the usage between the house and the cottage for the last 6 years after the cottage was built. They would like to claim the cottage as a personal residence and claim the exemption to avoid the capital gains. I believe I can do that, but my question is, how is the other house treated. Not sure if I need a fair market value of the house at 2016 or when they sell it. and do the process over again less the years claimed for the cottage..hence my confusion
Thanks
