Seniors, care and family caregivers
What happens to Mom's house and the capital gain when she moves into care?
Short answer
Usually, the house can still be sold tax free. Say it was Mom's principal residence every year she owned it. Then a sale closing by the end of the next calendar year is usually tax free. The sale must still be reported on Schedule 3 and Form T2091. If the house sits empty longer, part of the gain can become taxable. Renting it out has its own rules.
Is the sale still tax free after she moves out?
Usually, if the home was her principal residence for every year she owned it. The exemption counts the years someone in the family "ordinarily inhabited" the home.
After that, an empty home generally does not qualify. A longer wait can make part of the gain taxable.
- It counts in every year she, her spouse or her child lived there. Part of a year is enough, including the year she moves out.
- It counts for one more year through the formula's "plus one" rule. So one empty calendar year before a sale is usually covered.
- Example from the book: a father moves out in March 2026. A sale that closes in 2027 is usually fully covered. A sale in 2028 or later can leave part of the gain taxable.
Does the sale have to be reported?
Yes. Every sale of a principal residence after 2015 goes on Schedule 3 and Form T2091 of the return. That applies even when the whole gain is exempt. A designation filed late can carry a penalty of $100 for each complete month, up to $8,000.
A family unit can designate only one property for any given year. A couple with a house and a cabin must choose.
What if the family keeps it or rents it out?
Keeping it empty means insurance, heat, taxes and upkeep. Read the vacancy condition in the insurance policy and tell the insurer.
Renting it out is a change of use. That is a deemed sale at its value that day, unless an election is filed with that year's return. The home can then stay her principal residence for up to 4 years, with no capital cost allowance claimed. Rental income is taxable. The four-year election does not help a home that simply sits empty.
If the house is sold, the proceeds earn income. That income counts toward next year's GIS and Alberta Seniors Benefit.
Who can sign the sale if Mom cannot?
Her attorney under an enduring power of attorney can sign, within the powers it gives. Land Titles needs a copy certified by a notary. If the document starts only on loss of capacity, it also needs written proof that this has happened.
Without an enduring power of attorney, no one in the family can sign, not even her spouse. Someone would have to ask the court to be appointed trustee. If she is married and the home is in her name alone, her spouse's dower consent is likely needed. Ask the lawyer.
What if she dies before it is sold?
If the home passes to someone other than a spouse or partner, the final return reports its deemed sale. The exemption is claimed on Schedule 3 with Form T1255, not Form T2091. The exemption covers the home only up to the date of death. A later rise in value before the estate sells is taxed in the estate.
Related questions
Should we sell the house before or after Mom moves into care?
The house is usually the last thing to sell, not the first. Decide where she will live, move, deal with the contents, then sell the house last, empty. A Type A or Type B space is offered when one opens, so plan for the house to sit empty for a time.
What if Mom bought her condo less than a year before moving into care?
A gain on a home sold within 365 days of buying it is normally taxed in full as business income. A sale because of serious illness or disability is an exception, so a move into care soon after buying is usually covered. Keep the medical evidence.
Does it matter if Dad still lives in the house?
The exemption counts every year her spouse or child lived there, even for part of the year. In the book's example, the wife still lives in the home, so it can keep qualifying as their principal residence.
Drawn from Legacy Planning in Care, Chapter 7. Selling the home, by Derik Godbout, PBA, CEA, DMA. Reviewed October 2026. General information, not advice for your situation; rules and amounts change, so confirm current figures before you act.
Want this looked at for your family?
Derik Godbout is a Certified Executor Advisor and tax adviser in Edmonton. Legal documents are drawn by your lawyer.
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TaxOnTax™ Advisory Ltd. is a tax planning, accounting and executor advisory practice that also provides plain-language tax education. Derik Godbout is a PBA, CEA and DMA, Personal Tax Services Specialist™, not a CPA, lawyer, registered investment adviser, or licensed insurance professional. Nothing on this site constitutes personalized tax, legal, investment, or insurance advice. Always consult a qualified professional before acting on any information.