When am I required to report the sale of my home to the CRA?

You must report the sale of your principal residence on your federal income tax return for the year the sale occurred, even if the entire gain is fully sheltered by the principal residence exemption. This reporting requirement has been in place since 2016, when the CRA changed the rules to require disclosure of all home sales on Schedule 3 of the T1 return.

Before 2016, many homeowners did not report home sales because the gains were fully exempt. Failure to report is now a compliance issue — the CRA can deny the exemption for late-filed returns, impose penalties, and reassess gains that would otherwise have been sheltered. The exemption is not automatic; it must be claimed on the return.

On Schedule 3, you provide the year of acquisition, the proceeds, and the number of years you are designating the property as your principal residence. If you are only partially claiming the exemption (because you also owned another property during some years), the calculation is more detailed. Ontario residents file federally — there is no separate Ontario form for this — as capital gains are governed by the federal Income Tax Act.