Principal Residence Exemption

DEC 6, 2016

written by: Evelyn Suvajdzic

Every home owner’s tax world changed on October 3, 2016!  Due to the overheated Vancouver and Toronto real estate markets and, in an attempt to combat perceived abuses of the principal residence exemption, the Canada Revenue Agency announced amendments to the reporting requirements for the sale of a principal residence.

Taxpayers must now report the disposition of their principal residence.  Per CRA:

“Starting with the 2016 tax year, generally due by late April 2017, you will be 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”

As a taxpayer you must report the sale and make the designation of principal residence on your personal tax return.  Failure to do so will result in penalties; the lesser of either:

1.      $8,000 or

2.      $100 for each complete month from the due date the filing should have been made.