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.