CRA Warning: If you sold your home in 2016 you must report it to the CRA when filing your taxes. If you don’t, you may be subject to penalties of up to $8,000. Many homeowners are concerned over this new requirement and the CRA’s intention with this information. There is speculation that this is in preparation of the federal government elimination to primary residence capital gains exception, which would devastate retirement savings of most of Canadians who have used their primary residence as their retirement fund.
According to the CRA, “when you sell your principal residence or when you are considered to have sold it, usually you do not have to report the sale on your income tax and benefit return and you do not have to pay tax on any gain from the sale. This is the case if you are eligible for the full income tax exemption (principal residence exemption) because the property was your principal residence for every year you owned it.”
However, beginning with the 2016 tax year (for most individuals due by late April 2017), you are required to report basic information (date of acquisition, proceeds of disposition and description of the property) on your income tax and benefit return when you sell your principal residence to claim the full principal residence exemption.
The CRA now requires you to designate your home as your principal residence when you sell or are considered to have sold all or part of it. You can designate your home as your principal residence for the years that you own and use it as your principal residence. Fortunately, you do not have to designate it each year.
To designate your property, use Form T2091(IND), Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust).
If you sold your home (residence) in 2016 or later, you also have to report the sale on page 2 of Schedule 3, Capital Gains (or Losses) in 2016.
If it was not your primary residence for the duration of ownership, it gets a bit more complicated.
For details and instructions visit the CRA Instruction Page.
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