If reading up on tax changes before you go to bed is not something you do on regular, let me fill you in!
Capital Gains tax (CGT) is triggered on the sale of an asset such as property, the exception is if the property is considered your primary residence. Capital Gains is calculated with these three amounts:
- the proceeds of disposition;
- the adjusted cost base (ACB); and
- the outlays and expenses incurred to sell your property.
You will considered to have a gain if the proceeds of disposition is greater than the sum of the adjusted cost base and the outlays and expenses incurred to sell the property.
On October 3, 2016, the government announced that you must report on your tax return when you sell your primary residence claim the full principal residence exemption ie not pay capital gains.
So what is the difference? Previously, when you sell your principal residence, it did not have to be reported to the CRA. They have changed this to improve transparency in the system. So whether a property is your principal residence OR investment asset, both will have to be reported on your tax returns.