Not quite right. See this:
Cottage as a Principal Residence
If you have both a home and a cottage, and sell one of them at a profit, you must make a decision as to whether to designate the sold property as your principal residence for some or all of the years it was owned. If you sell a cottage that you have owned for 10 years, you could designate the cottage as your principal residence for the entire 10 years in order to eliminate capital gains tax, as long as you have not designated any other property as your principal residence during that time.
This would mean that when you sell your home you will likely be paying capital gains tax, as you cannot also designate the home as your principal residence for those 10 years. If you have a significant gain so far on your home but a small gain on the sale of the cottage, it might be best to save the exemption for the sale of your home.
If you had sold a previous home at a gain say 4 years prior to selling the cottage, and did not declare the sale for capital gains purposes, then you can only claim the cottage as your principal residence for a maximum of 4 years. This is because you were deemed to have claimed the principal residence exemption when you sold the previous home.
