If I sell my house, do I pay taxes? You may realize a capital gain when you sell your home. Determine if your property is your principal residence.
If the property was solely your principal residence for every year you owned it, you do not have to pay tax on the gain.
If at any time during the period you owned the property, it was not your principal residence, or solely your principal residence, you might not be able to benefit from the principal residence exemption (which eliminates the taxable gain) on all or part of the capital gain that you have to report.
What is a principal residence?
Your principal residence can be any of the following types of housing units:
- a house
- a cottage
- a condominium
- an apartment in an apartment building
- an apartment in a duplex
- a trailer, mobile home, or houseboat
A property has to qualify to be a principal residence.
How does a property qualify?
A property qualifies as your principal residence for any year if it meets all of the following four conditions:
- It is a housing unit, a leasehold interest in a housing unit, or a share of the capital stock of a co-operative housing corporation you acquire only to get the right to inhabit a housing unit owned by that corporation.
- You own the property alone or jointly with another person.
- You, your current or former spouse or common-law partner, or any of your children lived in it at some time during the year.
- You designate the property as your principal residence.
The land on which your home is located can be part of your principal residence. Usually, the amount of land that you can consider as part of your principal residence is limited to a 1/2 hectare (1.24 acres). However, if you can show that you need more land to use and enjoy your home, you can consider more than this amount as part of your principal residence. For example, this may happen if the minimum lot size imposed by a municipality at the time you bought the property is larger than a 1/2 hectare.
Get more information on how to report the sale of your principal residence.
Selling an investment/rental property:
If you sell a rental property for more than it costs, you may have a capital gain.
List the dispositions of all your rental properties on Schedule 3, Capital Gains (or Losses). If you are a partner in a partnership that has a capital gain, the partnership will allocate part of that gain to you. The gain will show on the partnership's financial statements or in Box 151 of your Slip T5013, Statement of Partnership Income.
Visit the CRA's website for requirements for selling a property that isn't a principal residence.