Capital gain payable on non-principal residence
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When you sell your home or when you are considered to have sold it, usually you do not have to report the sale on your income tax and benefit return and you do not have to pay tax on any gain from the sale. This is the case if the home was your principal residence for every year you owned it.
If your home was not your principal residence for every year that you owned it, you have to report the part of the capital gain on the property that relates to the years for which you did not designate the property as your principal residence. To do this, complete Form T2091(IND), Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust). If you are the legal representative for a deceased person, you can designate a property using Form T1255, Designation of a Property as a Principal Residence by the Legal Representative of a Deceased Individual.
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Note:
Because your home is considered personal-use property, if you have a loss at the time you sell or are considered to have sold your home, you are not allowed to claim the loss.
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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). You can do this by using square metres or the number of rooms, as long as the split is reasonable.
See Did you file Form T664? if you filed a capital gains election on the property you disposed of. If you did file Form T664 you may need to complete the T2091(IND)-WS, Principal residence worksheet.
Completing your Schedule 3
Report only the gain on the part you used to produce income. For information on how to report the gain see Real estate, depreciable property, and other properties. You will also find an example showing how to report the capital gain on a disposition of land and building for a principal residence partly used for earning income.
Forms and publications
- Guide T4036, Rental Income
- Guide T4037, Capital Gains
- Form T1255, Designation of a Property as a Principal Residence by the Legal Representative of a Deceased Individual
- Form T2091(IND), Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust)
- Form T2091(IND)-WS, Principal residence worksheet
- Income Tax Folio S1-F3-C2, Principal Residence
Related topics
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). You can do this by using square metres or the number of rooms, as long as the split is reasonable.
See Did you file Form T664? if you filed a capital gains election on the property you disposed of. If you did file Form T664 you may need to complete the T2091(IND)-WS, Principal residence worksheet.
Completing your Schedule 3
Report only the gain on the part you used to produce income. For information on how to report the gain see Real estate, depreciable property, and other properties. You will also find an example showing how to report the capital gain on a disposition of land and building for a principal residence partly used for earning income.
Forms and publications
- Guide T4036, Rental Income
- Guide T4037, Capital Gains
- Form T1255, Designation of a Property as a Principal Residence by the Legal Representative of a Deceased Individual
- Form T2091(IND), Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust)
- Form T2091(IND)-WS, Principal residence worksheet
- Income Tax Folio S1-F3-C2, Principal Residence