Selling? Beware Capital Gains Tax on Rental Suites, Laneway Homes
The federal government of Canada has begun cracking down on capital gains taxes, which home owners are only exempt from on the sale of their principal residence. Laneway homes and rental suites on a property are not exempt from capital gains tax upon the sale of the home.
The federal government has introduced a new rule that for the first time requires home owners to declare the sale of their principal residence in their annual income tax return, as of the 2017 tax year. As has been the case for many years, income from rental units - including laneway homes and suites on the property - must also be declared.
This new combination of information will allow the Canada Revenue Agency to see where home sellers are selling a principal residence that has been operating rental suites, leaving the portion of the home that was rented out liable for capital gains tax.