Failure to let CRA know you sold your home in 2016 could cost you up to $8,000.00 in PENALTIES!!
When you complete your income tax this year, be sure to report the income. Before you freak out - this does not mean you will be taxed on the sale of your home, rather it is to claim your "exemption" from Capital Gains from selling your home.
When the rules changed in October of 2016, the requirement to report this income was put forth - and going forward, you should be prepared to do this year over year.
If you sold a home that was not your Primary Residence...bad news for you - you are paying Capital Gains Tax.
Here is a quick look at what you need to do to steer clear of any headaches (Thanks to Global News!!):
Report the sale of your primary residence on Schedule 3 of your T1 return.
You’ll have to indicate when you bought the house, when you sold it and how much you made on it. You’ll also have to provide a description of the property.
If you didn’t live in the house for the entire period you owned it, you’ll have to also file Form T2091, according to the CRA website. This would apply, for example, if you’ve designated your cottage as your principal residence for part of the year.
Even if you rent part of the house or use it for business as well, you might still be able to claim it as your primary residence. More details here.
If you forget to report the sale this year, you should file an amended return as soon as you can. The CRA can impose a penalty of $100 for every full month since the filing deadline, capped at $8,000. The good news is that the agency has said that for the first year it will only apply the penalty “in the most excessive cases.” Remember, though, if you don’t file, you won’t be eligible for the capital gains tax exemption.
Check out the Global News video below for more info.