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Principal residence exemption


#1

Good morning:
If a married couple sell their residential house in 2016 that they owned jointly, does the sale of the property have to be reported on both returns? If so, does each one report the full amount of sale or is it split in half?
I thank you in advance for your reply.


#2

I think the sale would have to be reported on both returns, subject to the attribution rules. The joint ownership means the spouses have an undivided interest in the house which also means they each have “some” interest in the house. It would be up to them, probably with help from their advisors, to determine how much of an interest each of them should report for tax purposes. You may have to take the attribution rules into account in determining these interests.


#3

Thanks for your reply Kevin.
I think I should make this more clear.
This is their own house that they lived there for 19 years and they did not sell it for profit. This is new in 2016 that a sale of principal residence must be reported and to designate it on schedule 3 as their own residence to be exempted from capital gain.
So my question would be, should I report the sale of the house on both returns or only one return. If two returns, should I report the value of the selling price in half?

Thanks again for any assistance.


#4

I’m aware of the new reporting requirements for sales of principal residences. I was saying that I think you would have to report some part of the disposition on the returns of both spouses. Unfortunately, the harder part for you is determining how much to report on each return. In the absence of information about who contributed how much to the purchase of the property and how the attribution rules may or may not affect this, my only suggestion would be to split it in half. If the PRE renders the gain non-taxable then it may be a moot point. I assume there is some portion of the gain that is not sheltered by the PRE?

This doesn’t sound like a TaxCycle issue so you may want to discuss this on Taxboard, if you’re a member (if you’re not, you should join).


#5

Taxboard refers to Taxboard.ca: a community of Canadian tax and accounting professionals who offer up mutual support via a private, secure forum that has become a deep repository of practical tax know-how and just continues to get better.

For more info see http://taxboard.ca/about.html.


#6

Thanks for the information


#7

Thanks for your reply


#8

Hi Helga,
I do not have professional degree as CGA or CA. I have only business administration diploma. Can I still join the Taxboard?


#9

If you are a PROFESSIONAL taxpreparer, you should qualify for the board.

Professional is defined as a person engaged in a specified activity as one’s main paid occupation rather than as a pastime: “a professional boxer” synonyms: paid, salaried


#10

@helga_spence
From taxboard.ca: “IF YOU ARE
a Canadian professionally designated accounting and tax professional…” precludes registration of non-designated tax preparers


#11

the paragraph preceding that statement contemplates non-designated tax preparers. I honestly don’t think anyone that is in the tax preparation business has ever been refused entry.

[ quote]
…By restricting forum access to designated professionals and selected others, we are free to discuss tax and accounting at a professional level, colleague to colleague. We solve tax issues collaboratively, and we grow together as a knowledge community; a community of practice around tax. [ /quote]