Many Canadians’ largest tax break is not having to pay tax on the capital gain when they sell their home, thanks to the principal residence exemption. Here are three questions that come up.

Can you claim the principal residence exemption more than once? Yes, you can claim one principal residence per calendar year, even when you sell your second, third or subsequent home.

What’s the criteria for claiming a vacation property? Some vacation property owners want to designate the property as their principal residence for years when it had a larger capital gain than their home. Though the term is “principal” residence, an eligible property only has to be “ordinarily inhabited in the year” by the owner or the owner’s spouse or child. Just living in the cottage, cabin or chalet for a short period qualifies.

What are the reporting rules? You report the sale of your principal residence when you file your tax return for the year you sell the property. You designate the property on Schedule 3, “Capital Gains or Losses” and complete Form T2091 (IND), “Designation of a Property as a Principal Residence by an Individual.”

For more information on the principal residence exemption, please talk to your tax professional.