There are changes to the principal residence exemption for the 2016 tax year. Prior to 2016, taxpayers disposing of a property qualifying as their principal residence did not have to report the sale on their income tax return due to a CRA administrative position.
However, beginning in the 2016 tax year, all dispositions (or change in use) of a principal residence must be reported in the tax year in which the property was disposed (or deemed disposed), even if it was the taxpayer’s principal residence during each year of ownership. The CRA is providing some reporting relief, original purchase documents will not be necessary if the property will be fully exempt; only the address, proceeds of disposition and the year of acquisition will be required.
It is important to note that if the sale is not reported in the tax return in the year of disposition the principal residence exemption will not be permitted.
Implications of failing to report the disposition of a principal residence also include:
- Your income tax return can be reassessed by CRA beyond the normal reassessment period (generally for individuals this is 3 years from the date of the initial notice of assessment).
- Late filing penalties will apply if a late designation of principal residence is made. It should be noted that the CRA is not required to allow a late principal residence designation.
Posted in Tax Tips for 2016 Tax Year
- Client News
- Estate Planning
- Film & Television
- Industry News
- Seminars + Presentations
- Strategic Insights
- Success Stories
- Tax Legislation
- Tax Tips for 2016 Tax Year
- Tax Tips for 2017 Tax Year
- Tax Tips for 2018 Tax Year
- Tax Tips for 2019 Tax Year
- Walsh King
- Walsh King Company Culture
- Walsh King News
- The Value of a Business Valuation
- Selling a Business Is an Important Decision – Do You Know the Tax Implications?
- What You Need to Know About Canadian and B.C. Film Tax Credits
- Partner Kevin Walsh Set to Speak at Exit This Way – Sell Your Business With Confidence
- What You Need to Know About Construction Management System Implementation or Upgrade
- THE FILM PRODUCTION LIFE CYCLE