If you bought or sold your home this year or plan to buy or sell a home soon, the Canada Revenue Agency (CRA) has information to help you.
Principal residence exemption
When you sell your principal residence, did you know that any profit (capital gain) may be exempt from taxes? In fact, if your home was your primary residence for every year that you owned it, you do not have to pay tax on the capital gain.
Your principal residence can be any of the following:
- a house, cottage or condominium
- an apartment in an apartment building or a duplex
- a trailer, mobile home, or houseboat
In order for a property to qualify as your principal residence:
- You must own, or jointly own the property.
- You, your current or former spouse or common-law partner, or any of your children must have lived in the property at some time during the year.
To benefit from the principal residence exemption you must report the sale appropriately on your income tax and benefit return. How you do so can vary depending on whether the property you sold was your principal residence for the entire time you owned it. Only one property can be designated as a principal residence per tax year per family unit. A family unit includes you, your current or former spouse (or common-law partner) and any children under the age of 18.
Home buyers’ amount
You can claim the home buyers’ amount of up to $5,000 on your income tax and benefit return for a particular year if both of the following apply:
- you or your spouse or common-law partner acquired a qualifying home; and
- you did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years (first-time home buyer).
You do not have to be a first-time home buyer if you are eligible for the disability tax credit or you acquired the home for the benefit of a related person who is eligible for the disability tax credit.