Before 2016, there was no need to report the sale of your principal residence on your personal tax return.
Starting with the 2016 tax year, you are required to report the sale of your principal residence on Schedule 3 and Form T2091 in certain cases, on your personal tax return. Starting 2017 and subsequent tax years, you must file Schedule 3 and Form T2091 in all cases.
The principal residence exemption (PRE) rules have not changed, per S 40(2)(b) of the ITA. If you designate your home as a principal residence for the entire time you owned it, the gain is not taxable on the sale. Now the details of the sale of your principal residence must be reported on your personal tax return.
If you failed to report the sale of your principal residence on Schedule 3 and Form T2091, CRA can reassess your personal tax return beyond the statue barred period of 3 years.
Per S 220(3.5) of the ITA, the penalty for not reporting the sale of your principal residence (Schedule 3 and T2091) on time will be the lesser of the following amounts:
- $8,000; and
- $100 for every complete month that the request is late.