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Sale of Principle Residence

Hello Everyone, today I would like to inform you of an update regarding the sale of one’s principle residence. As you may already be aware, the sale of one’s principle residence in Canada is exempt from capital gain tax, because of this there generally hasn't been a reason to report the sale, but the rules have changed for the 2016 return and onward.

While the sale of one’s principle residence does remain free of capital gain tax for the years it was designated as the owner’s principle residence, the transaction is now required be to reported under the Capital Gains section of the T1 Income Tax and Benefit Return. Late designations of a property as a principle residence can be adjusted with a penalty of $100 per month (to a maximum of $8000). A principal residence does not have to be the house where the owner resides all the time, indeed according the CRA the property may qualify as a principle residence if the owner, the owner’s children, or the owner’s spouse reside there at some point during the year, although this can change if the property is rented out. It is also important to remember that an owner and spouse may only have one principle residence between them, this principle residence may even be outside of Canada. The above change also apply in the disposition of property even though the property has not actually been sold in such a case. 

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Monday, 24 January 2022
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