Which taxes do I need to pay when selling a home?

Depending on what your house was used for, you may be able to dodge a hefty tax bill when selling your home.

Now that you've decided it’s time to sell your home, you should think about the implications for your taxes.

• Whether you’re selling your home because you want to upgrade your space, you're moving for a new job opportunity in another city or you're downsizing to a smaller home, you will need to remember the taxes you’re responsible for paying.

While you may feel relieved after the sale of your home, you should remember that you have tax obligations to consider.

• If the home you've sold was your principal residence for every year you owned it then you're usually not required to report it on your income tax and benefit return.
• This means you do not have to pay tax on any gains you receive from the sale for your home.
• However, if you don’t have any gains at the time of your sale, you can't claim the loss, since your home is considered a personal-use property.

While you can avoid taxes if the home you've sold was occupied by you as your principal residence, you will have to pay taxes on the property if it was not your principal residence for every year it was owned by you.

• You will have to report any capital gains on the property for the years that the property was not your principal residence.

• To properly report your gains to Canada Revenue Agency, complete form T2091 (IND) Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust).
• If the homeowner has passed away and you are legally representing the deceased person, complete form T1255 Designation of a Property as a Principal Residence by the Legal Representative of a Deceased Individual.

It's important to contact the Canada Revenue Agency and a tax professional in order to properly report the sale of your home. They can further advise you on the proper steps to take and forms to fill out.