Do I Pay Capital Gains Tax When I Sell My Home in British Columbia?
This answer covers the law of British Columbia.
Usually not, if the home was your principal residence, but you still have to report the sale. Since the 2016 tax year, the sale must be reported on Schedule 3 (Capital Gains) of your T1 return, and the CRA will only allow the principal residence exemption if the sale and designation are reported. For sales in 2017 and later, Form T2091 (or T1255) must also be completed.
You can designate only one home as your family's principal residence for each year, and it must be owned, ordinarily inhabited by you or a family member, and designated.
Part of a gain can be taxable in some situations. If you change a home to rental use, you are considered to have sold it at fair market value. If part of the home earned income, the sale price and cost base may need to be split, unless the use is ancillary, with no structural change and no capital cost allowance claimed. A home owned for less than 365 consecutive days is deemed business income, with exceptions for listed life events. Your own facts matter, so confirm them with an accountant or lawyer.
Key takeaways
- The principal residence exemption is only allowed if you report the sale and designation on Schedule 3 (Capital Gains) of your T1 return.
- You can designate only one home as your family's principal residence for each year.
- Changing a home to rental use is treated as a sale at fair market value, and gains for years it was not your principal residence are reportable.
- A home owned for less than 365 consecutive days is deemed business income, so the exemption does not apply, unless a listed life event applies.