The capital gains exemption applies to your principal residence, regardless of its location.

For more than four years, my principal residence has been in the United States, where I am a permanent resident. I am considering selling this house in 2009 and returning to Canada. If this residence is sold only after my return to Canada, will I have to pay income tax in Canada on the income from this sale?

Thank you. Ann

Dear Ann: The capital gains exemption applies to your principal residence, regardless of its location. Therefore, you will not have to pay any income tax upon disposal of this residence. However, if your rent the residence or if you purchase another property here, special rules apply.

Do not hesitate to contact us for a personalized consultation, for I am answering your question without knowing all the facts and cannot guarantee the answer until I am made aware of the full details.

Regards, The Impôts Ici! team

Source :http://www.cra-arc.gc.ca/F/pub/tp/it120r6/it120r6-01-f.html

IT120R6

A Principal Residence Outside Canada

40. A property that is located outside Canada can, depending on the facts of the case, qualify as a taxpayer's principal residence (see the requirements discussed in ¶s 2 to 6).

A taxpayer that is resident in Canada and owns such a qualifying property outside Canada during a particular taxation year can designate the property as a principal residence for that year in order to use the principal residence exemption (see ¶ 8 for the meanings of "resident in Canada" and "during").

Should a non-resident of Canada who owns a property outside Canada become a resident of Canada at any particular time, the provisions of the Act normally apply to deem that person to acquire the property at that time at fair market value, thereby ensuring that any unrealized gain on the property accruing to that time will not be taxable in Canada.

Thereafter, the comments in the first two sentences of this paragraph may apply.