[et_pb_section fb_built=”1″ _builder_version=”4.18.0″ _module_preset=”default” custom_padding=”55px||||false|false” da_disable_devices=”off|off|off” global_colors_info=”{}” custom_margin__hover_enabled=”off|desktop” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” width=”95%” max_width=”100%” custom_margin=”||-24px||false|false” custom_padding=”55px||||false|false” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][wahi_breadcrumb _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][wahi_breadcrumb-link title=”Real Estate 101″ _builder_version=”4.18.0″ _dynamic_attributes=”link_option_url” _module_preset=”default” link_option_url=”@ET-DC@eyJkeW5hbWljIjp0cnVlLCJjb250ZW50IjoicG9zdF9saW5rX3VybF9wYWdlIiwic2V0dGluZ3MiOnsicG9zdF9pZCI6IjcyMiJ9fQ==@” global_colors_info=”{}”][\/wahi_breadcrumb-link][wahi_breadcrumb-link title=”Sell” _builder_version=”4.18.0″ _dynamic_attributes=”link_option_url” _module_preset=”default” link_option_url=”@ET-DC@eyJkeW5hbWljIjp0cnVlLCJjb250ZW50IjoicG9zdF9saW5rX3VybF9wYWdlIiwic2V0dGluZ3MiOnsicG9zdF9pZCI6IjIxMDYifX0=@” global_colors_info=”{}”][\/wahi_breadcrumb-link][wahi_breadcrumb-link title=”@ET-DC@eyJkeW5hbWljIjp0cnVlLCJjb250ZW50IjoicG9zdF90aXRsZSIsInNldHRpbmdzIjp7ImJlZm9yZSI6IiIsImFmdGVyIjoiIn19@” _builder_version=”4.18.0″ _dynamic_attributes=”title” _module_preset=”default” module_text_color=”#686E6E” global_colors_info=”{}”][\/wahi_breadcrumb-link][\/wahi_breadcrumb][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” custom_padding=”12px||12px||false|false” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _dynamic_attributes=”content” _module_preset=”default” header_font_size=”3.5rem” header_line_height=”4.5rem” header_font_size_tablet=”42px” header_font_size_phone=”3rem” header_font_size_last_edited=”on|phone” header_line_height_tablet=”4.5rem” header_line_height_phone=”3.2rem” header_line_height_last_edited=”on|desktop” global_colors_info=”{}”]@ET-DC@eyJkeW5hbWljIjp0cnVlLCJjb250ZW50IjoicG9zdF90aXRsZSIsInNldHRpbmdzIjp7ImJlZm9yZSI6IjxoMT4iLCJhZnRlciI6IjwvaDE+In19@[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” custom_padding=”||9px|||” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][wahi_socialsharing _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][\/wahi_socialsharing][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” custom_padding=”6px|||||” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” text_font_size=”24px” text_line_height=”1.5em” custom_margin=”||32px|||” global_colors_info=”{}”]<\/p>\n
[\/et_pb_text][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” text_font_size=”1.13rem” text_line_height=”1.18rem” custom_margin=”||5px|||” global_colors_info=”{}”]<\/p>\n By Emily Southey | 16 minute read<\/p>\n [\/et_pb_text][et_pb_post_title title=”off” author=”off” date_format=”M j” categories=”off” comments=”off” featured_image=”off” _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_post_title][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” width_tablet=”” width_phone=”100%” width_last_edited=”on|phone” max_width_tablet=”” max_width_phone=”100%” max_width_last_edited=”on|phone” custom_padding=”21px||||false|false” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_image src=”@ET-DC@eyJkeW5hbWljIjp0cnVlLCJjb250ZW50IjoicG9zdF9mZWF0dXJlZF9pbWFnZSIsInNldHRpbmdzIjp7fX0=@” align=”center” force_fullwidth=”on” _builder_version=”4.18.0″ _dynamic_attributes=”src” _module_preset=”default” custom_padding=”2px|||||” border_radii=”on|32px|32px|32px|32px” border_radii_tablet=”on|32px|32px|32px|32px” border_radii_phone=”on|0px|0px|0px|0px” border_radii_last_edited=”on|phone” global_colors_info=”{}”][\/et_pb_image][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” custom_padding=”||11px|||” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” text_font_size=”21px” text_line_height=”1.6em” header_2_font=”||||||||” header_2_font_size=”36px” header_2_line_height=”1.3em” header_3_font_size=”1.25rem” header_3_line_height=”1.88rem” header_4_font=”|700|||||||” header_4_font_size=”1.25rem” header_4_line_height=”1.88rem” global_colors_info=”{}”]<\/p>\n You might think that selling a property is all about the money you\u2019ll gain from the sale. But the reality is expenses come with selling a home. One type of expense you may have to budget for is taxes. There are many taxes relating to home sales in Canada. Though some likely won\u2019t apply to you, it\u2019s important to be aware of them. From capital gains tax and non-resident taxes to the recently proposed residential property-flipping tax<\/a>, we dive into all there is to know about Canadian home sales taxes below.\u00a0<\/p>\n –<\/span><\/p>\n Many Canadians wonder if their home sales are subject to capital gains tax. We\u2019re here to set the record straight. Capital gains tax only applies to investment properties, not principal residences. Therefore, if the home you\u2019re selling is your principal residence, the sale will not be subject to capital gains, but if you\u2019re selling a second home or investment property, it will be. Keep reading to learn more about capital gains tax, including how it\u2019s calculated and tips for reducing how much capital gains tax you pay.<\/p>\n –<\/span><\/p>\n According to the Canada Revenue Agency (CRA), a property qualifies as a principal residence if it meets the following four criteria:<\/p>\n \u00a0–<\/span><\/p>\n \u00a0–<\/span><\/p>\n Please note that your property must meet ALL four of the conditions listed above. Further, the CRA states that a principal residence can be any of the following types of homes: house, cottage, condominium, apartment, duplex, trailer, mobile home, or houseboat.<\/p>\n –<\/span><\/p>\n Capital gains tax is a type of tax you pay to the Canadian government when you make a profit from selling something of value. This could be a property (with the exception of a principal residence), a stock, a bond, or any other asset. Capital gains tax only applies if you earn more from the sale than you paid originally. For example, if you purchased an investment property for $400,000 and then sold it for $550,000 two years later, your capital gains are $150,000 (the difference between the purchase price and the sale price). You are then legally required to report this amount, along with your other income, on your income tax return.<\/p>\n –<\/span><\/p>\n Yes, there are several exemptions to capital gains tax. Therefore, you shouldn\u2019t just assume that because you\u2019re selling a home, you\u2019ll have to pay this tax. The principal residence exemption is the more important exemption to capital gains tax in Canada that sellers need to be aware of. Primary places of residence are tax-exempt according to the CRA. To ensure your residence qualifies as a principal residence, refer to the information above. Keep in mind that even if the home you sold was your principal residence, you are still required to report the sale on Form T2091 (IND), Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust) and Schedule 3, Capital Gains or Losses. Failure to report a home sale, even a principal residence home sale, could lead to the CRA subjecting the sale of your property to capital gains tax.<\/p>\n \u00a0–<\/span><\/p>\n The other exemption to paying capital gains tax on home sales relates to farm and fishing properties. If you own a farm or fishing property and sell either for profit, the amount you earned on the sale is exempt from capital gains tax up to a lifetime limit of $1,000,000. This deduction can be claimed on line 154 of your income tax return. To take advantage of this tax exemption, your farm or fishing property must meet the following conditions:<\/p>\n –\u00a0<\/span><\/p>\n –<\/span><\/p>\n Now that you know principal residences, along with farms and fishing properties, are exempt from capital gains tax in Canada, it\u2019s time to consider which properties are not exempt from this hefty tax burden. According to the CRA, <\/span>real estate<\/span><\/a> assets subject to capital gains tax in Canada include any buildings, land, and homes, whether used for business or residential purposes, so long as they are not designated as a principal residence. Examples of properties subject to capital gains tax include cottages (if you have a principal residence elsewhere in the province) and investment properties purchased to generate rental income.<\/span><\/p>\n [\/et_pb_text][et_pb_code _builder_version=”4.27.4″ _module_preset=”default” hover_enabled=”0″ sticky_enabled=”0″]Capital Gains Tax<\/h2>\n
What is a principal residence?<\/b><\/h3>\n
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What is capital gains tax?<\/b><\/h3>\n
Are there exemptions to paying capital gains tax on a home sale?<\/b><\/h3>\n
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What properties are not exempt from capital gains tax?<\/b><\/h3>\n