How to prevent getting capital gains tax when renting out rooms

The Canadian government is very clever in building a a tax system that helps the poor and tax the rich. In the art of calculating your taxes, the Canadian government one home per person as their personal or more appropriately named principle resident. Their principal residents does not get tax when you sell it because, well, classified as being your personal property and not meant for investments. It is until you buy a second house that one of the houses that the second house gets taxed on. In particular, capital gains tax.

So the government encourages you to buy one house to keep you living off the streets, but really discourages you from buying a second house.

Now, one would then believe buying one house and renting out rooms on their principal resident would fix the tax problem because the government does allow you to own one house. Once again, the government has this scenario covered as well. In order for the house to be considered a principal resident, you must claim at least 50% to 65% personal use or else it is deemed as an investment property and you will once again be tax on capital gains. So what this means is that all your expenses such as mortgage interest, utility, hydro, condo fee is taxable only taxable at most 50%, at safest, 35%.

To keep it simple, let's say, to maintain your property, it cost you $100. 35% of that would be $35. So you can only claim $35 in expenses while you still have to claim 100% of your rental revenue. in order to prevent getting capital gains tax on your principal property.