Selling real estate? The CRA is watching
If Canadian residents are in the process of selling real estate, they must now take extra care to make sure the sale is properly reported to the Canada Revenue Agency. There are three different categories of real estate including (1) selling a property that has been your primary residence, (2) property that was purchased to make improvements and flip, and (3) property that was purchased to rent. The sale of your primary residence may or may not be subject to capital gains tax. Houses purchased to flip can be fully taxable even if you lived in the property while making improvements if your original intent was to sell it for a profit. The income from rental properties is taxable income, but the sale of rental property for a profit may be subject to a partial capital gains tax.
“Since 2016, all property sales must be reported to the CRA, including that of a principal residence. When you sell property, the transaction must be correctly defined and reported for tax purposes. Failure to do so may result in unwanted audits, potential back taxes, and related interest and penalties.“