Reporting the sale of a principal residence
Pre-test question
Sorry, that is incorrect
Since 2016, if an individual sells their property and it was their principal residence, they must complete the Principal residence designation section on page 2 of Schedule 3, Capital Gains (or Losses) by ticking the box that represents their situation. They must also complete Form T2091IND, Designation of a Property as a Principal Residence by an Individual (Other than a Personal Trust).
That is correct
Since 2016, if an individual sells their property and it was their principal residence, they must complete the Principal residence designation section on page 2 of Schedule 3, Capital Gains (or Losses) by ticking the box that represents their situation. They must also complete Form T2091IND, Designation of a Property as a Principal Residence by an Individual (Other than a Personal Trust).
Instructions
- Open the tax software
- Review the Background information and Required slips (tax slips, receipts, etc.)
- Provide all required information for the appropriate sections of the tax software
- Once completed, compare your results with the solution provided
- Afterwards, refer to Key points of the tax software and the Takeaway points
Background information
Situation
Igor sold his property for $170,000.00 on December 5, 2025. He purchased the property on January 15, 1999 and it has been his principal residence every year he has owned it.
| Categories | Datas |
|---|---|
| Name | Igor Muratovic |
| Social insurance number (SIN) | 000 000 000 |
| Address | 123 Main Street City, Province X0X 0X0 |
| Date of birth | March 15, 1965 |
| Marital status | Single |
Required slips
T4 – Statement of Remuneration Paid (Botanical Gardens Inc.)
Text version for the above image
T4 – Statement of Remuneration Paid
Protected B
Employer’s name: Botanical Gardens Inc.
Employee’s name and address:
Last name: Muratovic
First name: Igor
123 Main Street
City, Province X0X 0X0
Box 12: Social insurance number: 000 000 000
Box 14: Employment income: 34,500.00
Box 16: Employee’s CPP contributions – see over: 625.00
Box 18: Employee’s EI premiums: 579.00
Box 22: Income tax deducted: 4,350.00
Box 24: EI insurable earnings: 34,500.00
Box 26: CPP/QPP pensionable earnings: 34,500.00
Box 45: Employer-offered dental benefits: 2
RC210 – Advanced Canada workers benefit (ACWB) statement
Text version for the above image
RC210 – Advanced Canada workers benefit (ACWB) statement
Issued by: Canada Revenue Agency
Muratovic, Igor
123 Main Street
City, Province X0X 0X0
Social insurance number: 000 000 000
Box 10: Total Basic Advanced Canada workers benefit: 759.00
Review your results
Solution to Reporting the sale of a principal residence.
Key points of the tax software
Important note
To access complete instructions on the various steps of entering data into the software, click on the title of each section below.
Igor's interview
- Click CRA Questions in the left-side menu
- Select Yes from the Did you sell a principal residence in 20XX? drop-down menu
- Click T4 and employment income in the left-side menu
- Click the + sign next to T4 income (earned in any province except Quebec) in the T4 and T4E section
- Enter the information from the tax slip
Advanced Canada workers benefit (RC210)
- Click Other information slips in the left-side menu
- Click the + sign next to RC210 – Canada workers benefit advance payments statement [Federal line 41500]
- Enter the information from the tax slip
Taxable capital gains - Sale of principal residence (T2091)
- Click Capital gains (or losses) and ABIL in the left-side menu
- Click the + sign next to Personal use property (Including the principal residence) in the Capital gains and ABIL section
- Enter the dates into the Date of acquisition (dd-mm-yyyy) and Date of disposition (dd-mm-yyyy) fields
- Enter the amount for which Igor sold his property into the Proceeds of disposition field
- In the Principal residence section, select Yes from the Designation of the property as a principal residence? drop-down menu
- In the Address of the principal residence section:
- enter the address of the property that was sold
- select T2091 - Designation of a property as a principal residence by an individual from the Select the form to use (T2091 or T1255) drop-down menu
- In the Designation section:
- enter the year from Date of acquisition (dd-mm-yyyy) into the From field
- enter the year from Date of disposition (dd-mm-yyyy) into the To field
Takeaway points
- Volunteers may prepare tax returns for individuals who have sold a property only if:
- it was their principal residence for all years that they owned it
- they never had to report any rental income (or loss) generated from the property
- When an individual sells their principal residence, any capital gain from that sale is not taxable because of the principal residence exemption
- In this case, since the property Igor sold was his principal residence for all the years he owned it, the amount is not included on line 12700 of his tax return
- Igor has to report the sale and designate the property as his principal residence on his tax return
- To ensure that the capital gain is not taxed, the years entered into the Designation section must be the same as those entered for the Date of acquisition and the Date of disposition fields in the tax software
- The software automatically completes Schedule 3 and Form T2091, and reports the sale and designation
- because of the exemption, the software does not report any income (capital gains) on the tax return
Page details
- Date modified: