CRA recently examined whether participants in rent-to-own style arrangements hold beneficial ownership for purposes of the principal residence exemption (PRE).

CRA concluded that:

• Exclusive possession alone is not sufficient
• Lack of control over financing, renting, or structural changes indicates no beneficial ownership
• Gains tied to accumulated “interest” payments are not eligible for the PRE

Action: Novel home-purchase arrangements should be reviewed carefully before assuming tax benefits apply.