Prior to 2016, taxpayers disposing of a property qualifying as their principal residence did not have to report the sale on their income tax return. However, beginning in the 2016 tax year, all dispositions (or change in use of the property) of a principal residence must be reported in the tax year in which the property was disposed (or deemed disposed), even if it was the taxpayer’s principal residence during each year of ownership.
The CRA is providing some reporting relief – original purchase documents will not be necessary if the property will be fully exempt; only the address, proceeds of disposition, and the year of acquisition will be required.
Failing to report the disposition of a principal residence could result in:
- The principal residence exemption being denied, if the sale is not reported on the tax return in the year of disposition.
- Your income tax return being reassessed by the CRA beyond the normal reassessment period (generally, for individuals, this is three years from the date of the initial notice of assessment).
- Late-filing penalties if a late designation of a principal residence is made. Note: the CRA is not required to allow a late principal residence designation.
Posted in Tax Tips for 2018 Tax Year
- Client News
- Estate Planning
- Film & Television
- Industry News
- Seminars + Presentations
- Strategic Insights
- Success Stories
- Tax Legislation
- Tax Tips for 2016 Tax Year
- Tax Tips for 2017 Tax Year
- Tax Tips for 2018 Tax Year
- Tax Tips for 2019 Tax Year
- Walsh King
- Walsh King Company Culture
- Walsh King News
- Top 10 Business, Tax and Accounting Challenges for Transportation Businesses
- The Benefits of Working at a Midsize Firm
- Waiting for CFE Results? Here’s How to Manage Your Stress
- A Steady Hand: Let Walsh King Be Your Temporary Controller
- The Value of a Business Valuation
- Selling a Business Is an Important Decision – Do You Know the Tax Implications?