Principal Residence Exemption
The Principal Residence Exemption exempts homeowners from capital gains tax on the sale of their primary residence in Canada.
September 30, 2025
What is the Principal Residence Exemption?
The Principal Residence Exemption (PRE) is a Canadian tax benefit that exempts capital gains tax on the sale of a property designated as the taxpayer’s principal residence. Only one property can be designated per family unit per year.
Why the Principal Residence Exemption Matters in Real Estate
The PRE matters in real estate because it allows homeowners to keep more of their equity when selling their primary residence. It significantly impacts financial planning, investment strategies, and tax liability for property owners.
Example of the Principal Residence Exemption in Action
A family sells their Toronto home for a $500,000 gain. Because the home was their principal residence, the entire gain is exempt from capital gains tax under the PRE.
Key Takeaways
- Exempts capital gains on sale of a primary residence.
- Only one property per family unit can be designated each year.
- Applies to houses, condos, cottages, and certain other dwellings.
- Affects tax planning for homeowners and investors.
- Requires proper designation on annual tax returns.
Related Terms
- Capital Gains Tax
- Income Tax Act
- Primary Residence
- Real Estate Investment
- Estate Planning
Average and median describe different aspects of the same month’s transactions. Both are affected by the mix of homes sold.
Category averages compare different homes and locations; the gaps are not estimates of the cost to upgrade an otherwise identical property.
The five categories shown account for 5,000 of the board’s 5,057 sales. The remaining 57 transactions were in other housing categories.
Monthly observations are not seasonally adjusted. Active listings count properties available at month-end; they are not construction inventory.
Average and median prices share one dollar axis. These unadjusted transaction measures do not control for changes in the homes sold.
TRREB’s 416/905 categories compare the apartments sold in each area. The difference does not isolate a location premium for equivalent units.
Highlights from the Delta Golf & Country Club listing brochure. (Colliers)
5680 Oak Street in Vancouver and its surrounding context. (MCMP Architects)
Ground-level renderings of the tower proposed for 5680 Oak Street in Vancouver. (MCMP Architects)
