Make Sure You Properly Report Your House Sale
For those that have been doing their taxes for many years they may have had a opportunity where they have sold their principal residence and really had no requirements for reporting this to the Canada Revenue Agency. This has all changed as of the 2016 tax season. Now individuals that have sold their home during that particular year have to provide the tax department with some information. This is done on the schedule three that has been updated to accommodate this reporting. This is the capital gains or loss section of the tax return. It will be an necessity to file if you want to take advantage of the principal residence exemption. The type of information that you are now expected to provide is the date of the sale how the proceeds were disposed of and the address of the home that you sold.
In the past if the sale of your house was totally exempt there was no reason for you to have to report it but with this new change even if that is the case you still must report the sale. The reason that the CRA is put this into place is because they are concerned about house flipping. This way it allows them to be able to track this event if it is taking place and makes it much more difficult for those that are in the business of flipping their homes.
What has been happening in the housing market is that a lot of people have been buying condominiums for example during their building stage and then once they are fully built and the value of them has increased they put them on the market. They actually have never lived in the residence and this goes against the grain of what the CR regulations are about concerning the exemptions for primary residences. The CRA is going to be able to very closely scrutinize taxpayers now to see the number of properties that they are buying and selling and if this is taking place to frequently it is certainly going to raise the red flags where the CRA is going to take a much closer look at what is taking place.
If you have sold your home and are using a accountant for the preparation of your taxes it is your responsibility to bring this to their attention. This way this professional is able to do your taxes in the appropriate manner.