Did you sell your home in 2018? If so, did you know that you need to report the sale of your principal residence on your 2018 income tax return? In many cases where a person sells their residence it is possible to avoid paying income tax on the increase in value between the time of acquisition and the time of sale (often referred to as the principal residence exemption). Before 2016 no action was required on the part of the homeowner to qualify for the principal residence exemption, however, it is now necessary to report the sale in Schedule 3 of your personal income tax return and to complete Form T2091. If the sale is not reported, the principal residence exemption may be forfeited.
If you sold your home in 2016 or 2017 and failed to report the sale you may still be able to amend your tax return to claim the exemption. For more information click here.
The Canada Revenue Agency has recently indicated that they may accept late-filed designations and amendments without a penalty being imposed (the penalty would otherwise be the less of $8,000 or $100 for each full month late).
If you have questions about how to claim the exemption please contact us. For questions related to real estate transactions please contact Gordon Van Vliet.