Report your real estate income

Your tax obligations in the real estate sector

If you sell or rent property, you have an obligation to report all of the income you earn from these transactions. How you report the income depends on many factors, therefore it is important to understand your tax obligations and the relevant tax laws. You will also want to know what deductions to claim as this may reduce the amount of tax you need to pay. You can avoid penalty and interest charges by reporting accurately and paying what you owe on time.

Reporting property sales

If you sell a property – even if it’s your principal residence – you must report the sale when you file your tax return. The type of property you sell will determine how you report it on your tax return.

Selling your principal residence

If you sell your home, you are generally eligible to claim the principal residence exemption, which means you may not owe taxes on the profit from the sale. Learn more about reporting the sale of your principal residence.

Selling a property other than your principal residence

If you sell a property other than your principal residence for more than you paid for it, you may have accrued a capital gain or it may be considered business income. Similarly, if you sold the property for less than you paid, you may have a capital loss or business loss. In all cases, you must report this information on your income tax return. This includes the sale of a rental property or a recreational/vacation/seasonal property.

If you buy a property with the intention of re-selling it at a profit, your profit from the sale is fully taxable. This includes a property you bought, renovated and then re-sold (property flipping). This could also be a property that you bought before it was built and then re-sold before building was completed (sometimes called an assignment sale). In all cases, the sale of a newly constructed or substantially renovated residential house will be taxable for GST/HST purposes, regardless of your motive when it was first purchased. Find out about the tax effects of buying real estate to sell for a profit.

Buying from a non-resident

If you buy property in Canada from a non-resident, you could be responsible for paying the taxes on the profits earned by the non-resident seller. Protect yourself and ask your real estate lawyer if you need a Certificate of Compliance before any money exchanges hands. More information is available on buying property from a non-resident.

Reporting your rental income

When you rent out property, including short term stays through accommodation sharing platforms, there are tax implications related to the income you collect and the expenses you incur. Find out how to report your rental income.

Addressing non-compliance

The Canada Revenue Agency (CRA) takes a comprehensive approach to dealing with suspected non-compliance in any industry including targeted communications, examinations, audits, and where warranted, penalties or criminal investigations. As part of its approach within the real estate sector, the CRA addresses non-compliance through audit activities and reports on results regularly.

Voluntary Disclosures Program (VDP)

The VDP grants relief on a case-by-case basis to taxpayers and registrants who voluntarily come forward to fix errors or omissions in their tax filings, including real estate transactions, before the CRA knows or contacts them about it. To find out if you are eligible, see Voluntary Disclosures Program (VDP).

Forms and publications

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Date modified:: 2024-04-26

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