Changes to the Principal Residence Exemption in Canada

By Jory Stern
March 15, 2017

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The Department of Finance has issued new rules regulating the sale of principal residences in Canada.

Previously, individuals who sold their primary residence did not need to report the sale on their tax return if their capital gains tax liability was eliminated by claiming the principal residence exemption. As of October 2016, the Department of Finance requires that individuals who are claiming the principal residence exemption for sales that occurred on or after January 1, 2016 must report the sale on their 2016 return. If the disposition is not reported on a taxpayer’s tax return in the year in which the property is disposed of, the principal residence exemption will not be permitted. Please be sure to notify your accountant regarding the sale of property so that it can be reported on your Canadian tax return.

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Jory Stern is an Associate at Altro Levy. His practice focuses on cross border estate planning and real estate. Mr. Stern’s practice focuses on cross border estate planning and real estate. He represents clients who are purchasing property in the U.S., drafts trusts and power of attorney documents and advises clients on U.S. tax compliance and expatriation. Mr. Stern received his J.D. from Nova Southeastern University Shepard Broad College of Law. He received his undergraduate degree at Western University where he studied Philosophy. Mr. Stern is a member of the Law Society of Upper Canada & the Florida Bar, and has a Foreign Legal Consultant permit.

Les changements à l’exemption pour une résidence principale

Par Jory Stern
Le 15 mars 2017

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Le ministère des Finances du Canada a décrété de nouvelles règles régissant la vente d’une résidence principale au Canada.

Antérieurement, lorsqu’un individu vendait sa résidence principale, il n’était pas tenu de déclarer la vente dans sa déclaration de revenus si l’impôt sur le gain en capital était éliminé par l’application de l’exemption fiscale pour une résidence principale. Depuis octobre 2016, le ministère des Finances du Canada exige que les individus qui se prévalent de cette exemption fiscale pour la vente d’une résidence principale ayant eu lieu le 1 janvier 2016 ou après déclarent la vente dans leurs déclarations de revenus. Si la vente n’est pas déclarée dans la déclaration de revenus pour l’année dans laquelle la propriété a été vendue, il ne sera pas possible de se prévaloir de l’exemption fiscale pour la vente d’une résidence principale. Veuillez informer votre comptable de la vente d’une résidence principale afin que cette transaction soit déclarée dans votre déclaration de revenus au Canada.

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Jory Stern is an Associate at Altro Levy. His practice focuses on cross border estate planning and real estate. Mr. Stern’s practice focuses on cross border estate planning and real estate. He represents clients who are purchasing property in the U.S., drafts trusts and power of attorney documents and advises clients on U.S. tax compliance and expatriation. Mr. Stern received his J.D. from Nova Southeastern University Shepard Broad College of Law. He received his undergraduate degree at Western University where he studied Philosophy. Mr. Stern is a member of the Law Society of Upper Canada & the Florida Bar, and has a Foreign Legal Consultant permit.

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