Did you sell a house in 2021? If you did, you have to put that information on your tax return. This legislation, I believe, came out in 2016. It forces all Canadians to, even though you are not taxed because of the principal residence exemption, report your home dwelling on your tax return when it was sold.

There's no tax, but the government wants to make sure that they're keeping track of the people that are buying and selling homes. They have to make sure that those people that are doing it too often and supplementing their income unfairly. They too need to pay their fair share of tax.

I've seen it many times in the past where people were building houses, moving in, selling, and then repeating. There's nothing wrong with that, but the CRA still wants to know.

The penalties for not doing so could be up to $100 a month to a maximum of $8,000. This is quite significant if you let it go for years and years. I would assume that the penalties will only be applied if, later on down the road, they found out that you were one of those people that were buying and selling houses often. Usually, rules like that are put in place to punish those that are doing wrong, not people that just forget.

In saying that, it’s worth remembering that not knowing that you need to file something or include something on your return is not a sufficient excuse to get rid of any of the penalties that would potentially be applied to you.

Reporting the sale of your home goes on Schedule 3 in your return under the Principal Residence section.