Filing and calculating capital gain tax on a sold rental property (previously a primary self residential place)

[ArashTheGreat]

Hello, my spouse and I used to own a property and lived in it for 5-6 years as our primary residence. We purchased a new property and moved out to our new place, rented the property that we used to live for a few years and sold it a few months ago. We claimed all rental income and expenses throughout the years when the property was rented. I think the way that the capital gain tax should be calculated is based on the difference between the Fair Market Value of the property at the time when we moved out and the price of it when we sold it. I think the capital gain tax must not be calculated for the period when we used to live in the property as our primary residence.

My questions are:

1. How can I file this scenario in UFile?
2. Am I able to claim all expenses e.g. repairs, improvements, etc. when I used to live in the property as the capital cost? 

[Geo123]

Hello ArashTheGreat,

To report the sale of your principal residence, please follow the steps below:

1. On the "Left-side menu on the Interview tab", select the "CRA Questions" topic.

2. On the page that appears, go to the line "Did you sell a principal residence in 2022?". The sale of a principal residence must now be reported with any principal residence designation.

3. If you answer "Yes", a topic will be generated in the "Left-side menu on the Interview tab" with the heading "Capital gains (or losses) & ABIL".

4. On the page appearing to your right, click on the plus sign "+" icon to the right of the line "Personal use property (Including the principal residence)".

5. On the page that appears, enters the relevant information in the first fields. If you are a co-owner of the residence with your spouse, go to the line "Your percentage share of capital gain/loss recorded here" enter your percentage.

6.The following line will be generated "Do you wish to transfer the remainder to your spouse's tax return (if applicable)?".

7. If you answer "Yes" you do not need to answer the CRA's question "Did you sell a principal residence" in your spouse's file because the program will transfer the information into their file.

8. Then go to the "Principal residence" section and go to the line that starts as follow: "Designation of the property as a principal residence to the Canada Revenue Agency (CRA)." and answer, "Yes" if the property that was sold was your principal residence as defined by the CRA and enter the address of the principal residence.

9. Next, go to the "Designation" section and select the period (taxation years) during which that property was designated as your principal residence. In the fields that follow, enter the year of beginning and the year of the end as the principal residence.

10. However, if you have not permanently resided in your principal residence, click the plus sign "+ Add another" icon to create another occupancy period for your residence.

11 If you rented your residence during the unoccupied period, go to the line "Change in use of property and election under section 284 or 286.1", and by selecting "Yes" a field will be created to indicate the period (from what year to what year) during which the residence was leased.

[ArashTheGreat]

Thank you for the prompt reply. It helped a lot but I am unable to locate the following item to fill out:

Quote

11 If you rented your residence during the unoccupied period, go to the line "Change in use of property and election under section 284 or 286.1", and by selecting "Yes" a field will be created to indicate the period (from what year to what year) during which the residence was leased.

• Could you please guide more precisely where I should find it?
• Also, I think the calculation of the capital gain tax should happen based on the date when we left the property to rented it out until we disposed it. Where should I enter the fair market value at the time when we vacated the property to the tenant as we want to avoid the capital gain miscalculation for the period when we resided in there?

 

Thanks.

[Geo123]

Hello ArashTheGreat,

Data Entry and Tax return output is as follow - here is an example for illustrative purpose only

Data Entry :

Capital Gains >> Real estate, depreciable property, and other properties

*Description of the property     [My_House_Then_Rental]

*Province or territory of the property    [Ontario]

*Date of acquisition (dd-mm-yyyy) [01-01-1990]

*Date of disposition (dd-mm-yyyy)[ 01-01-2022]

*Proceeds of disposition $500,000.00

*Adjusted cost base of the property $250,000.00

*Expenses incurred in making the disposition $2,500.00

Select the form to use (T2091 or T1255) [ T2091 ----]

 

Select the taxation years period that property was designated as principal residence

*From [1990 ]

*To [2018]

 Schedule 3 – Capital Gains :

 

*Personal-use property  (see the next page for  principal residence )

(Provide full description)

Principal residence (T2091) $22,500.00

Gain only 15800  $22,500.00

 

T2091 - Designation of a Property as a Principal Residence:

*Description of property

*Address Street number, street name, and unit number if applicable

Prov./Terr Postal code City Country

Year of acquisition 9955   [1990]

Proceeds of disposition 9954  $500,000

Designation

I, , hereby designate the property described above to have been my principal residence

(print your name)for the following  number of tax years ending after the acquisition date :

After 1981 [29]

After 1971 and before 1982 [0]

Total number of years designated (line 1 plus line 2) [29]

 

You should also consult - Changing all your principal residence to a rental or business property

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/principal-residence-other-real-estate/changes-use/changing-your-principal-residence-a-rental-business-property.html

[georgeguirguis]

I WANT TO REPORT A SALE FOR A RENTAL PROPERTY IN MTAX RETUERN 2022 USING  UFILE 2022

WHAT TO DO ?

[Sanjeev]

For 2023, I have a similar situation as ArashTheGreat.  When I follow the steps suggested by Geo123, then steps 10 & 11 do not work as described.  For step 10, the additional occupancy period is still has the title of "Select the taxation years...designated at principal residence".  Also, I don't see where I would find the line for step 11.  Same issue as ArashTheGreat mentioned about the gain up to change in use vs. gain since then and up to the sale.