Principal residence and other real estate
When you sell your home, you may realize a capital gain. If the property was solely your principal residence for every year you owned it, you do not have to pay tax on the gain. If at any time during the period you owned the property, it was not your principal residence, or solely your principal residence, you might not be able to benefit from the principal residence exemption on all or part of the capital gain that you have to report.
If you sold property in 2020 that was, at any time, your principal residence, you must report the sale on Schedule 3, Capital Gains (or Losses) in 2020, and Form T2091(IND), Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust). See sale of a principal residence for more information.
- What is a principal residence?
What type of housing unit can a principal residence be? How does a property qualify to be a principal residence?
- Designating a principal residence
When to designate your principal residence. When to use Forms T1255 and T2091.
- Sale of a principal residence
You may have to report the gain on the sale (actual or deemed) of a home using Form T2091, or complete Form T1255. What if you filed Form T664?
- Changes in the use of a principal residence
You may have to report a capital gain if you change your principal residence to a rental or business property, or vice versa.
- Sale of farm property that includes a principal residence
Only part of your capital gain may be taxable.
- Selling a building
Special rules may apply if you sold a building for less than its cost amount and its capital cost.
Forms and publications
- Guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income
- Guide T4036, Rental Income
- Form T2091(IND), Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust)
- T2091(IND)-WS, Principal Residence Worksheet
- Form T1255, Designation of a Property as a Principal Residence by the Legal Representative of a Deceased Individual
- S1-F3-C2, Principal Residence
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