?? Selling your home? Here’s what you need to know about Canada’s Principal Residence Exemption.

In Canada, when you sell your primary residence, you typically don’t pay tax on any increase in value since you purchased it, thanks to the “principal residence exemption.” However, you still need to report the sale on your tax return, even if it’s tax-free.

? Here’s a quick example:

Imagine John sells his home in 2023, where he’s lived full-time. To ensure he doesn’t pay taxes on the gain, his accountant:

1?? Files Schedule 3 to report the sale on his tax return. 2?? Completes Form T2091 to designate the property as his principal residence for all the years he owned it, allowing him to claim the exemption.

If John rented out part of his home, his accountant would calculate and report any gain for the rental portion separately, as only the part he lived in full-time qualifies for the exemption.

?? This exemption can be complex, especially if you rented part of your home or owned multiple properties. Working with a professional ensures you get the right exemption without any missed details!

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