By Rob Sambrook at DSKReal EstateTax Tip Blogs

Dispositions of Real Estate

By November 24, 2017 No Comments
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If you personally own real estate in any part of the world, be it your home, cottage, vacant land, condo,
rental property or any other interest in real property, be aware of your obligation to report in your tax
return, a sale or deemed disposition of that real estate.

Starting in 2016, Canada Revenue Agency announced an administrative change that now requires individuals to report some basic information in their personal tax return, about the sale of a principal residence in the year. Since 1982, only one principal residence designation is available per household. If you sell your home in a year and designate it as your principal residence for specific years, this will preclude you from claiming the principal residence designation on your cottage for common years of ownership. If you own both a home and cottage during the same years, this means you will ultimately have to report the gain on sale of each property, with exemption from that gain going to the property you have designated.

Tax will be payable on the capital gain realized on the other property. Canada Revenue Agency has been focusing its efforts on gathering this additional information because of high real estate selling prices, condo flipping, previously unreported sales of real estate, and improper use of the principal residence exemption. This is an area for potential tax revenue, so be aware that all real estate sales need to be reported in your personal tax return, even though some sales may be tax exempt due to the principal residence designation.

 

This tax tip is a publication of DSK on developments in the area of taxation. The material is general in nature, is current as of published date, and should not be relied upon to replace the requirement for specific professional guidance. These posts should not be considered advice to be acted upon without further professional consultation, as each reader’s personal financial situation is unique.