Best Tax Preparation Services in Stoney Creek, ON

Does Your Property Qualify As Principal Residence? What makes a house a home is your loved ones. The Canada Revenue Agency (CRA) takes this seriously when determining tax treatment of a property sale. The CRA allows any gain on the sale of a principal residence (the house where you live with your spouse and children) to be exempt from capital gain tax. This exemption can save you a significant amount in tax, given that benchmark house prices in Canada more than doubled over the past decade. Principal Residence Exemption (PRE) intends to encourage Canadians to purchase houses for themselves and their families, but not everyone uses it for that purpose. House flippers (who buy property, refurnish it, and sell it for a higher price) used this exemption to make money. Hence, the CRA became stricter about what qualifies as a principal residence and imposed capital gains tax on the sale of those properties they were not convinced were primary residences. The definition of primary residence remains vague and could change with the situation. In this article, we will try to understand the basis the CRA uses when qualifying a sale under the PRE.