Many people are not yet aware of the new reporting change by the Canada Revenue Agency relating to the sale of your principal residence.
Starting with the 2016 taxation year, the CRA has determined that if you sold your principal residence, you must now report the sale on Schedule 3 of your income tax return in order to claim the principal residence exemption. You will have to report the description of the property, date of acquisition, date of disposition, proceeds of disposition, adjusted cost base of the property (cost of the property plus capital improvements), and expenses incurred in making the disposition (such as legal fees and commissions paid), and any other related expenses incurred in making the disposition.
You must also specify the years for which you are designating the property as your principal residence, since you may also own other residential properties. Failure to report the sale of your principal residence is subject to a penalty of $100 per month to a maximum of $8,000.
It would be advisable to keep all your records pertaining to the sale of your principal residence in case the CRA would like to see them at a later date. This would include invoices for materials and structural improvements to your property that you have made over the years that you owned it.
Also, tell your accountant or tax preparer that you have sold your principal residence so they can include the information on your tax return.
For additional information on this topic please go to the CRA website and type in “principal residence” in the search box.
Maurice A. Mabillard, St. Albert
