How to calculate capital gains on Canadian Rental Property ("plus 1" formula or FMV method?)

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szbjsh
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Joined: Fri Nov 13, 2020 12:04 pm

How to calculate capital gains on Canadian Rental Property ("plus 1" formula or FMV method?)

Post by szbjsh »

I bought my principal residence in 2018 when I was a resident of Canada. In 2021, it was turned into a rental property (I did not and don't plan to claim CCA). I have also left Canada in 2021 and became a non-resident (am a US resident). I plan to move back into this property in the future once I move back to Canada permanently.

I have seen two methods to calculate capital gains:

Method 1) "plus 1" formula for exemption: (# of years home is principal residence + 1) x capital gain/ # of years home is owned;

Method 2) FMV has to be tracked every time change of use occurs. The difference between the two FMVs is the capital gain.

My questions are:

A. does being a non-resident make only method 1 available to me? If so, where I can find the guidance on CRA website that stipulates this?

B. if one stays a Canadian resident the entire time, which method do they use? Both are available?

Thanks!
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