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The short answer
Yes, it can. The CRA says property outside Canada can qualify as a principal residence, and a Canadian resident who owns it can designate it for a year, provided someone in the family ordinarily inhabited it that year. But only one home per family unit can be designated for each year after 1981, and only years when you were resident in Canada count, so designating a Nigerian house uses years you could otherwise claim on a Canadian home.
The principal residence exemption can remove some or all of the gain when you sell a home. Most people think of it for a house in Canada, but CRA guidance does not limit it to Canada. For Nigerians who own a family home in Lagos, Enugu or Ibadan, the real question is whether designating it is worth it.
What the CRA says
CRA Income Tax Folio S1-F3-C2 sets out the rules. The key points for a Nigerian home are:
- Location: paragraph 2.74 says property outside Canada can qualify, depending on the facts, and a Canadian resident who owns it can designate it.
- Housing unit: a house, apartment or flat, condominium unit, cottage and similar (paragraph 2.7).
- Ordinarily inhabited: you, your spouse or common-law partner, a former spouse or your child must ordinarily inhabit it during the year. Even a short stay can be enough, but where the main reason for owning it is to earn income, a brief stay generally will not qualify (paragraphs 2.10 to 2.11).
- Land: up to one-half hectare, including the area under the house, generally qualifies (paragraphs 2.32 to 2.35).
- One per family unit: for each year after 1981, a family unit, meaning you, your spouse or partner and unmarried children under 18, can designate only one property.
The formula and the residence condition
Paragraph 2.20 gives the formula. The exempt part of the gain is the gain multiplied by (1 + the number of years the home is designated while you were resident in Canada) divided by the number of years you owned it. The extra “1” only applies if you were resident in Canada in the year you acquired the home. Years when you lived in Nigeria and were not Canadian resident do not count.
Worked example (illustrative figures)
You bought a house in Lagos in 2017 while resident in Canada and sell it in 2026, having owned it for 10 tax years. Your parents lived in it, but they are not in your family unit, so you rely on your own visits and those of your spouse and children. Suppose you can support designating 3 years. The exempt fraction is (1 + 3) ÷ 10 = 40%. On a Canadian-dollar gain of $50,000, $20,000 is exempt and $30,000 remains, of which half, $15,000, is taxable at the inclusion rate described in the T4037 guide.
Those 3 years then cannot be used for a Canadian home your family owned at the same time. If your Toronto house gained more per year, designating Lagos for those years would increase your overall tax.
When a Nigerian home is a sensible choice
- You do not own a home in Canada for those years, for example while renting.
- Your Canadian home gained little in those years, and the Nigerian house gained more in Canadian dollars.
- Your family actually lived in or stayed at the house regularly, and you can show it with travel records.
Evidence the CRA may ask for
Because the test turns on whether the home was ordinarily inhabited in each designated year, the evidence is mostly about presence. Useful records include passport stamps and flight bookings showing stays at the house, utility and estate bills in your name, photographs, and correspondence showing the house was kept for family use rather than let out. If the house was rented to tenants for part of the time, the folio’s point about income-producing property matters: a brief visit to a house you mainly hold for rent generally does not make it your principal residence.
If you owned the house before you became resident in Canada, paragraph 2.74 also says you are generally deemed to acquire it at fair market value when you arrive, so only the gain after that date is in the Canadian calculation.
Reporting
Paragraph 2.15 says the designation is made in your return for the year you sell, with basic information on Schedule 3 and Form T2091(IND). Keep the property’s purchase documents, your travel dates and the exchange rates used. While you own it, a home used primarily for personal purposes is personal-use property, which the CRA excludes from the T1135 test; if you rent it out, it counts and the rent is income. See selling a Lagos house and Canadian capital gains and the treaty and Nigerian property gains.
Where Pryme fits
Keeping costs for a Nigerian home in one place helps when you work out the gain. A Pryme account keeps naira payments for repairs, rates and utilities together, with verifiable statements from VerifyDoc.ai (receipts).
Questions people ask
Can I claim the principal residence exemption on a house in Nigeria?
Yes, the CRA says property outside Canada can qualify if it meets the tests, including being ordinarily inhabited by you or your family unit in the year.
Can I designate both my Canadian and Nigerian homes?
Not for the same year. Only one property per family unit can be designated for each year after 1981.
Do years I lived in Nigeria count?
Only years when you were resident in Canada count in the formula, and the extra one year applies only if you were resident in Canada when you acquired the home.
Does my parents living in the house count?
The ordinarily inhabited test refers to you, your spouse or partner, a former spouse or your child. Parents are not listed.
Sources
- CRA Income Tax Folio S1-F3-C2, Principal Residence (modified 30 Jan 2024) · accessed Oct 2026
- CRA guide T4037, Capital Gains (modified 11 Feb 2026) · accessed Oct 2026
- CRA: Questions and answers about Form T1135 (modified 19 Oct 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.