The principal private residence exemption can also be used by buy-to-let investors to earn tax-free profits. In other words, you can move out of your home, rent it out for three years, and still not pay a penny in capital gains tax. (You will still need to pay income tax on any rental profits though.)

The principal private residence exemption can also be used by buy-to-let investors to earn tax-free profits. In other words, you can move out of your home, rent it out for three years, and still not pay a penny in capital gains tax.

Can you rent out your home as a primary residence?

Fortunately, there are a number of instances where it is completely acceptable to rent out the home you originally purchased as your primary residence. Check today’s mortgage rates. With the cost of rent rising across the country, renting out your home can be a great way to earn income. Being a landlord isn’t always easy, though.

When do you convert your primary home to a rental?

At the closing table, you sign documentation stating your intention to occupy the home as your primary residence. Your mortgage lender typically expects you to live in the home as your primary home for at least 12 months before converting it to a rental property, and they’ll have issued you a mortgage accordingly.

What makes a home a primary residence on a mortgage?

Primary Residence, Defined Your primary residence (also known as a principal residence) is your home. Whether it’s a house, condo or townhome, if you live there for the majority of the year and can prove it, it’s your primary residence, and it could qualify for a lower mortgage rate.

How long does a home have to be your primary residence?

You must have owned your home for at least 24 months out of the previous 5 years. It must have been your primary residence for at least 24 months out of the previous 5 years. You can’t have claimed another capital gains exclusion in the past 2 years.