Ascend Financial
It's not what you earn... It's what you keep
Font size: +

Principal Residence - Changes you should knowl

CRA has been very busy of late and their focus has landed on policies that effect principal residency followed by all taxpayers. In 2015 and earlier years, taxpayers were required to complete form 2091, which designated your home as a principal residence. The form required you to designate the years in which the home was your principal residence. The nice thing with this form was that it was required to be filed in the year if disposition (although most often this form was never filed as the capital gain was often fully offset by claiming the principal residence exemption). From an administrative perspective, CRA had waived this requirement to file if the exemption eliminated the gain.

However for the taxation years that end on or after October 3, 2016, if you sell a house that is your principal residence, you are required to report the sale and the resulting capital gain or loss on the schedule 3 of your T1 and to file the corresponding T2091 form. These forms are now mandatory regardless of whether your exemption fully offsets your capital gains.

Failure to file and disclose this as noted above will have significant implications.  Firstly, there is no limitations period where your return will be statute- barred. Hence CRA will have the ability to reassess at any point in the future. Therefore, CRA will retain their ability to re-open the tax return at any point in the future unless the information had properly been disclosed.

Secondly, the principal residence exemption itself will be allowed if the dale and the designation of principal residence are reported on your income tax return. If you realize that subsequent to the year of the sale and filing, that you failed to report the disposal of your principal residence, the CRA is not required to accept a late filing that designates the principal residence sale. Should they accept the late filing, the taxpayer is still subject to penalties which are the lesser of $8,000 or $100 for each complete month from the original filing due date.
Karen Gough

Comments

 
No comments yet
Already Registered? Login Here
Guest
Saturday, 18 August 2018