Did You Know? You Have to Report Your Home on Your Taxes
If you sold your home last year, for the first time ever you are now required to report it on your income tax return...
It all started last fall when Ottawa implemented changes to the mortgage lending rules - at the same time the Canadian government also put in place a small but important change that will affect hundreds of thousands of tax filers this tax season (a.k.a right now).
For the first time ever, Canadians who sold their principal residence in 2016 are required to report the sale to Canada Revenue Agency, even though any gains remain tax-free if they’ve lived in the property as long as they’ve owned it.
What do I need to report?
Only basic information from the transaction needs to be reported on your income tax return:
- the year of purchase
- the proceeds of the sale
- a description of the property
The home sale is included on the same form where capital gains from investments need to be listed.
What does this mean for me?
If you have always lived in your home as your principle residence and you sold it in 2016 (or any other year), there is nothing to worry about as no additional tax will need to be paid - it is more a matter of policy that has been put in place by the federal government to insure that the principal residence exemption was only used in appropriate cases.
If your home was your principal residence for only part of the time you owned it, a calculation is made to determine how much of the principal residence exemption will be allowed, and what you will be required to pax tax on.
What if I don’t report?
The tax man will come a-knockin’ - if you fail to report the sale of your home and have your taxes reviewed by the CRA, you could face penalties of up to $8,000, so it is best to be honest about the sale upfront.
All income tax returns are required to be filed by April 30.
For more information and a more detailed report, visit this link: