In the year you sell your property, add the Sale of Principal Residence section to your return and provide the address, date the property was acquired and the proceeds of disposition. Proceeds of Disposition is the actual selling price of the home. Don’t deduct any fees or other amounts from the selling price when reporting the proceeds.
If your home was your principal residence for every year you owned it
If your home was your principal residence for every year you owned it, you don’t have to pay any tax on the capital gain provided you declare it as your principal residence. Beside Principal residence for select “all of the years owned.” Wealthsimple Tax will fill out the necessary information of the T2091 - Designation of a Property as a Principal Residence by an Individual.
If your home was your principal residence for only some of the years you owned it
If your home was your principal residence for only some of the years you owned it, beside Principal residence for select “some of the years owned” and select the years that the home was considered your principal residence. Complete the remaining fields in the section. Wealthsimple Tax will use that information to calculate the capital gain and will automatically report it on the Schedule 3.
Only one residence per year can be designated as the principal residence between spouses or common-law partners. If you and your spouse own your home and had a capital gain from its sale, report your share of the property at the bottom of the section and Wealthsimple Tax will pro-rate the capital gain to your share. If you’re preparing your return jointly with your spouse or common-law partner, select their name in the Share with field and Wealthsimple Tax will automatically include the remaining share on their return.
Only part of my home was my principal residence, how do I report this?
If only a part of your home qualifies as your principal residence and you used the other part to earn or produce income, you have to split the selling price and the adjusted cost base between the part you used for your principal residence and the part you used for other purposes (for example, rental or business). How you split these does not necessarily have to be based on the size of each space - also take into account any factors which could have an effect on the relative value of either part of the home. Enter the proceeds of disposition and adjusted cost base into Wealthsimple Tax for the part of the home that was used to earn income so that the capital gain can be calculated on those values only.
The CRA will consider the entire property to be considered your principal residence in spite of the fact that you have used it for income producing purposes when all of the following conditions are met:
- The income producing use is ancillary to the main use of the property as a residence.
- There is no structural change to the property.
- No capital cost allowance is claimed on the property.
My home became a rental or business property or vice versa (change in use), how do I report this?
Every time you change the way you use a property, you are considered to have sold the property at its fair market value and to have immediately reacquired the property for the same amount.
If the property was your principal residence for any year you owned it before its change in use, you do not have to pay tax on any gain that relates to those years. You only have to report the gain that relates to the years your home was not your principal residence.
There are special situations where the change in use rules don’t apply. Learn more.
I sold my half of the home to my ex-partner, how do I report this?
Enter the amount that you sold the house to your ex-partner in the Proceeds of disposition field. If the home was not your principal residence for all the years you owned it, you will also pro-rate the adjusted cost base to your percentage of ownership for the time you owned it.
I moved homes more than once in the same year, how do I report this?
If you sold more than one property in the same calendar year and each property was, at one time, your principal residence, you must show this by completing a separate Form T2091(IND). Click the “Add another principal residence” button at the bottom of the Sale of principal residence section for each property sold in the year.
I bought a new home but my old home didn’t sell immediately, how do I report this?
When you sell your home, there may be an overlap period where you own both homes. The CRA recognizes this common scenario and there is a special rule (the “plus 1” rule) that allows a taxpayer to treat both properties as eligible for the principal residence exemption for a year where one residence is sold and another is purchased in the same year, even though only one of them may be designated as such for that year.
If you owned both homes for more than a year and did not use the vacant home for any purpose (for example, you didn’t rent it out), you will have to decide which home you want to declare as your principal residence for the overlapping years beyond that first year. Determine the capital gain on the sold home and the anticipated capital gain on the new home. For the overlapping years, declare the home that gives you the best fiscal advantage as your principal residence.
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