John Manuel


Sale of your Personal Residence

You might have noticed on your personal income tax return (T1) a new question asking whether you sold your principal residence during the year.  


You might wonder, why does CRA need to know that?  Aren't personal homes capital gains tax free?


Well ... usually but not always, it's not quite that simple.


If you ever rented out part of your home or used it for a business or employment, you could be stuck for some tax, depending on how much of the home was so used, for how long, and how you handled certain expenses deducted from the income.


There's not enough space here to go into much explanation.  Sufficient to say, that if business or rental portion of the home was more than half, if you made major renovations to that part or if you deducted depreciation from the rental or business income, you could have a problem.


So, whether you sold your home this year or not, when you bring me your tax return, be prepared to review this with me to make sure you are completely safe.


Meanwhile, sleep well.