Well guess what?
Here's the bombshell, as reported on The Greater Fool blog:
[size=100]Here are the facts:
- Taxpayers must report the sale of the family home if you’re claiming an exemption from capital gains tax (in the past that exemption was automatic). ‘Basic information’ about the property will be required on the tax form – yet to be determined. If you don’t comply, no exemption.
- The CRA will have authority at assess you for capital gains tax on real estate that is not reported on the tax return for the year in which it is sold.
- Ottawa will work with provincial governments (which maintain land registry operations) to ensure that all residential real estate transactions are recorded and taxed as required.
- The tax return, starting next April, will require details on the date a property was acquired, the proceeds of disposition and a description of the property. To qualify for a capital gains tax exemption, you must complete and file a separate Schedule. The full exemption may not be granted, depending on the details provided.
- If you sell your home but forget to include this information on your return, the CRA will not allow the proceeds to be tax-free. In that case you must ask the CRA to amend the return. This amendment will be granted “in certain circumstances” but may also come with a penalty equal to the lesser of $8,000 or $100 per month from the sale date to the request date.
- If you have a suite in your home, then sell it, the selling price must be split and reported. Part of it will qualify to the tax exemption and part will not. In markets with elephantine gains in home prices, this could be quite the bombshell.
So, if part of your home is occupied by a basement suite you can expect any capital gain on that percentage of the homes square footage to be taxed. I'm guessing that the CRA will have questions about the rental income too. Ouch!
Sounds fair to me.