Recently the Canada Revenue Agency (CRA) changed its administrative rules so that, unlike the past, if you sell your principal residence in 2016 or later years, you must report:
- The sale including the date and price of acquisition, the sale price and date and a description of the property; and
- The fact that the property was a principal residence
on your income tax return filed in 2017 if you want to claim the full principal residence exemption. The exemption means that no tax is paid on a property that is the principal residence of the seller. In the past CRA did not require taxpayers to report the capital gains on the sale of principal residences.
If you don’t claim the exemption then CRA will treat any gain in the value of the property as a taxable capital gain. One half of capital gains are deemed to be income in the year in which the capital gain is realized. The top marginal rate for income taxes in British Columbia is nearly 48% for income in excess of $200,000.