Problem: Principal Residence Designation
Mr. Stewart Simms has liyed most of his life in Vancouyer. In 1900, he purchased a three bedroom heme near English Baylor $125,000. In 2002, he acquired a cottage in the Whistler ski area at a cost of $40,000. In all subsequent years, he has spent at least a portion of the year liying in each of the two locations. When he is net residing in these properties they are left vacant.
On October 1, 2022, Mr. Simms sells the English Bay property for $015,000 and the cottage at Whistler for $720,000.
Mr. Simms wishes to minimize any capital gains resulting from the sale of the two properties.
Task
Describe how the two residences should be designated to optimize the use of the principal residence exemption. In addition, calculate the amount of the taxable capital gains that would arise under the designation that you have recommended. Show all supporting calculations.