Canadians didn’t used to report the sale of their home, but this has changed since the Liberal government introduced new federal mortgage rules back in October. If you fail to claim the sale of your primary residence, you could face up to $8,000 in penalties.
“Starting this tax-filing season, a home sale that took place after January 1, 2016 needs to appear on your income tax return” Global News, Erica Alini
Here is what you need to know
You still get the principal residence tax exemption
Although you will not have to pay a capital tax gains on the proceeds you made from the sale of your home, you will have to report the sale in order to claim the exemption.
Report the sale on schedule 3
You will have to provide information such as when you bought the home, when you sold it, how long you’ve been living there and how much you made off the sale. You will also have to include a general description of the home.
If you didn’t live in the house the entire time you owned it…
In that case, you will have to file Form T2091.
If you rent part of your house or use it for business…
You might still be able to claim it as your primary residence. Read more about this here.
If you forget to report the sale this year…
You should file an amended return as soon as you can. The CRA can impose a penalty of $100 for every full month since the filing deadline, capped at $8,000. For the first year, the agency has said they will only apply the penalty “in the most excessive cases”. If you don’t file, you won’t be eligible for the capital gains tax exemption.