Taxes on your real estate sale Ontario PPS Law
Learn about your tax obligation as a result of your real estate sale:
Principle Residence exemption for Canadian residents: The principle residence exemption for Canadian Residents rule exempts payment of taxes on the sale of a principal residence. This way you avoid tax on the sale of your primary residence and the profit thereof.
GST/HST: On a sale of a newly constructed or ‘significantly’ renovated home, a GST/HST is charged. You maybe eligible for some rebate if this was your principle residence depending on the sale price and the GST/HST paid.
Make sure you file a GST/HST new housing rebate application within two (2) years of the sale date.
Capital Gains Tax: While you may not have to pay a capital gains tax on your principle residence, you may be subjected to one on your rental property or your vacation home (at least partially). This is a concern for house flippers or property flippers. After January 1, 2023, residential property (including preconstructed condo) flipped before they are owned for at least 365 days is considered fully taxable as a business income. The silver lining is that most expenses you’ve incurred in the process is deductible but losses may not be claimed as a business loss.
In the event of a CRA assessment you will need to provide documents like your APS, your mortgage contract, your property appraisal, your subdivision plans (when subdivided into smaller lots), zoning applications, listing agreements, statement of adjustments prepared by your lawyer etc.
Property Tax: This is usually paid on a pro-rated basis until the date of your closing.
Taxes for Non-Canadian Resident Owners Selling a Home: Non-residents have tax implication that differs from that of citizens and residents. They require a clearance certificate. A tax of 25% (50% if it’s a rental property) is withheld until tax returns are filed and paid completely. Again, if the property is a rental property, a Section 216 (s.216) return confirming the report of rental income and tax paid thereto is also required.
How can PPS LAW PROFESSIONAL CORPORATION help you?
If you require further assistance in the above matter, please contact us. We are Immigrant-founded, multilingual and accommodating to cater the needs of all walks of life including the working-class community. As experienced professionals, we have been successfully assisting clients in this matter to their satisfaction. Contact us today.