Petra Fluffy has owned a residence in Kelowna, British Columbia since 2000 and in 2008 when she was appointed to the Senate, she acquired a 2^nd home in Ottawa. In each of the subsequent years, she spent some time at each residence. She sold both residences and moved in with her mother in 2019. The selling prices and costs of the homes are shown below. She wants to minimize the taxes she pays on the capital gains.

Home	Kelowna	Ottawa
Selling price, net of real estate fees	897,000	534,000
Acquisition cost	623,000	426,000
Capital gain	274,000	108,000

SHOW ALL WORK BELOW

1. Explain to Petra how the residences should be designated in order to minimize her capital gainsthat arose as the result of selling the two properties. (3 marks)

2. Calculate Petras taxable capital gain under the designation that you have recommended. (2 marks)