11 Mar Sales of Principal Residences

Posted at 11:28h in Tax Planning and Compliance by 11 Mar

As most of us know, purchasing a home is a great way to save for retirement. For those who have mortgages, it forces a portion of each pay cheque be set aside. Any capital gains realized from the sale of a principal residence are exempt from personal taxes.

In order to claim your principal residence exemption, the sale of a principal residence must be reported in the tax year in which the property was sold. The taxpayer can only designate one property to be their principal residence for each tax year.

As of 2016, the Canadian government changed reporting requirements for principal residence exemptions. The following details need to be reported on Form T2091:

  • The ownership percentage between taxpayer and spouse
  • Proceeds of disposition
  • Year of acquisition
  • Address of property sold

If you have sold your principal residence during the year, it is important to let us know so that we can prepare the appropriate documentation for your personal tax filing. Late filing can result in a penalty of up to $8,000.

Facts surrounding your particular situation should be carefully considered to make sure the right choices are being made. We encourage you to reach out to one of Clearline’s team members to discuss the details, before finalizing any transactions.

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