Quick answer: The taxable portion of your gain is 50%.
So, if you purchased the cottage in 1990 for a cost of $100,000; and you sell for $200,000; you will pay tax on the gain of $100,000 at the rate of 50%. That is, you would add 50% of the gain ($50,000) to your income for the year and pay tax on that.
Important caveats: if you co-own the cottage, you divide the gain between co-owners.
You can *reduce* the amount of gain by *adjusting* the cost base (the original cost of the cottage) to *add* the cost of any capital improvements over the years (think new dock, new roof). If you have owned the cottage for a long time period, these calculations apply in different ways (related to changes in capital gains tax over time).
Note that making this calculation implies doing a bit of forecasting. Essentially, you are "gambling" that the gain on the property you designate as your principal residence is more than the gain on the other property will be when and if you sell it.
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