I sold my home - principal residence designation

If you sold (or are considered to have sold) your home during the year, you might have realized a capital gain or profit. Usually you don’t have to pay tax on any capital gains from the sale of your home if the property was your principal residence for every year you owned it (known as principal residence exemption). However, you’ll need to designate your home as your principal residence to claim the principal residence exemption on form T2091(IND): Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust), when you file your tax return.

Note: The Canada Revenue Agency (CRA) states even if you didn’t actually sell your principal residence, you might have a deemed disposition which must be reported. A deemed disposition is when you are considered to have disposed of (sold) property, even though you didn’t actually sell it. For example, a deemed disposition will occur when you change how you use your principal residence, such as if you change all or part of your principal residence to a rental or business operation. Refer to the Changes in use section below for more information.

If the property was your principal residence for only some of the years or wasn’t your principal residence at all, you will have to pay tax on the gains from the sale. You'll need to report your capital gains on Schedule 3 (and Schedule G, if you’re a Québec resident) in H&R Block’s tax software. Schedule 3 and Schedule G are combined in the software and can be found on the Pension contributions & expense page, under Investments, on the Credits & deductions tab.

You can only designate one property as your principal residence for any specific year. However, if you sold your principal residence and bought another (or moved to another property that you own) in the same year, you might be able to claim the principal residence exemption for both properties that year (known as the “plus one” rule).

Note: Only one residence per year can be designated as the principal residence between spouses. If you and your spouse own your home and had a capital gain from its sale, both of you will need to report the gains on your tax return and split it based on your investment in the property. For example, if you and your spouse each own 50% of the house, you would split the gains 50 – 50 on your return.

Did you know? Since your home is considered personal-use property, if you had a loss from selling your home, you aren’t allowed to claim the loss.