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Commercial Pilot Licence (CPAER) – Canada · Question

For Canadian tax purposes, what is the 'principal residence exemption' primarily designed to achieve for an individual?

The principal residence exemption allows Canadian individuals to sell their primary home without paying capital gains tax on the profit, provided certain condit

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Question: For Canadian tax purposes, what is the 'principal residence exemption' primarily designed to achieve for an individual?

Answer options:

  • To allow tax-free rental income from a primary residence. ✅ To exempt the capital gain from the sale of a primary residence from taxation.
  • To defer property taxes indefinitely.
  • To provide a tax credit for mortgage interest paid.

Correct answer: To exempt the capital gain from the sale of a primary residence from taxation.

Explanation: The principal residence exemption allows Canadian individuals to sell their primary home without paying capital gains tax on the profit, provided certain conditions are met.

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