The file appears in your inbox: "We sold our house in March and bought the cottage in May. I attached the sale documents. The house gain is $2 million, the cottage was $1 million. Can you file the return?"

Your first instinct is to designate the house as principal residence for all 39 years and claim the cottage for the two years after the house sale. Full exemption on the house, partial exemption on the cottage. But the math tells a different story. The cottage was owned for nine years with a $1 million gain. That is $111,000 gain per year. The house was owned for 39 years with a $2 million gain. That is $51,000 gain per year. Claiming the house wastes the exemption on the lower-gain-per-year property. The correct strategy designates the cottage for six of the years when both were owned, uses the "1+" rule for one more year, and adds the two years after the house sold. Full exemption on the cottage. The house gets 33 of its 39 years. The tax difference is $108,000.

This program walks you through scenarios that creates principal residence complexity:

• Excess land rules where property exceeds one-half hectare but minimum lot size restrictions preserve the exemption
• Change of use elections under subsections 45(2) and 45(3) that avoid deemed dispositions and extend designation rights for four additional years
• The ordinarily inhabited test that disqualifies properties during renovation or construction phases
• Flipped property rules deeming sales within 12 months to be business income with no exemption available
• Foreign tax credit interactions where claiming the exemption eliminates the credit and wastes both benefits
• Trust ownership restrictions from 2016 and the December 31, 2016 valuation date for non-qualifying trusts

Most claims are straightforward. One property owned continuously, occupied the entire time, sold to an arm's length buyer. The complications emerge when clients own multiple qualifying properties, when land size exceeds limits, when properties convert from personal to rental use, or when sales occur within 12 months under the new flipped property rules. A property under construction does not qualify for the years when it was vacant land. A cottage sold in January does not qualify that year if it was not winterized and not occupied. Missing the change of use election when a home becomes a rental creates a deemed disposition at fair market value with no opportunity to preserve exemption rights for future years.

The program includes examples showing tax consequences of different strategies. You will see the difference between optimal and suboptimal multiple property claims. You will understand when making a subsection 45(2) election saves exemption rights worth hundreds of thousands versus when it wastes them because the property was owned for decades and proration creates minimal impact. You will learn that beneficial ownership, not legal title, determines who can claim the exemption, and why adding a child to title to avoid probate can trigger immediate deemed dispositions and future exemption losses. The material covers technical traps, from the "1+" rule being eliminated when non-residents purchase property after 2016, to forfeited deposits being taxable as capital gains on the right under contract rather than sheltered as principal residence gains.