The Government of Canada is taking multiple steps to manage and improve housing affordability for millions of middle class Canadians.
So, to ensure tax fairness and plug tax loopholes around capital gains exemption on sale of a principal residence, the Canada Revenue Agency has made it mandatory for house owners to report the sale of a principal residence on their tax return.
The rule comes into effect for any sales that occurred on or after January 1st, 2016 even though the announcement was made in October 2016.
What does this mean for a house owner?
This means that any Canadian taxpayer who sold his/her house on or after 1st January 2016 must provide all the information to their accountant before the taxes are finalized. The accountant has the responsibility report it to the CRA to avoid any tax liabilities on the sale
The house owners will need to provide the following information:
• Date of purchase of the house
• Amount of sale of the house
• Description of the property
This can be even more complicated if the house that was sold was not your principal residence for all the years you owned. Or if the property was located outside of Canada. If that’s the case, more paperwork will be required.
So if you have sold your house in this year, make sure you discuss this with your accountant as a failure to report the sale can attract penalties of up to $8000.
You can visit any Softron Location near you or call 905-273-4444 and we will be happy to help you with your reporting requirements.