Sign up for our

Tip of the Week

Principal Residence

Sept. 27/16

Every family is entitled to one principal residence. The principal residence is a special rule which allows Canadians to avoid tax on any capital gain on the sale of their house. There are forms which should be prepared when a principal residence is sold. There is no tax implications if you have lived in the home and did not rent it out, or own other homes at the same time. Due to some perceived abuses of this rule, it is possible that CRA will start asking for this form to be filed no matter what. The overheated home market in Vancouver is leading CRA to wonder if everyone who has a gain on the sale of a home is reporting it properly. We may soon see property transactions reported to CRA in the same way that all gains and losses on investments are disclosed. Therefore, if you sell your principal residence this year, fill out the form T2091 to be sure that you are not taxable on the gain and then put this paperwork in a safe place.