2019 selling of house

[KellyD 0]

If someone sells their house to move in to another house,  is it required to report the sale of a house if it is not a rental.

[Nawal 8]

Hi KellyD, yes it is. To report the sale of your principal residence, please follow the steps below:

1. In 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 2018?". 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.

 

[DennisC 0]

This is not working for me. The program keeps blanking out the information entered on the Personal Use Property screen. It then shows error messages indicating information is required.

[Nawal 8]

Hi DennisC, we suggest you to contact our support team at support@ufile.ca .

[Anabela 0]

I do the taxes for my in-laws who are elderly and on a pension. This info is extremely helpful however, I would also like to add that in 2019

they sold their Personal Use home Cottage to downsize to a condo. I followed the steps above and it worked well, but I also would like to ask for any expenses paid or split with new buyers example: municipal tax and school taxes, is that added as just other deductions? 

If they received proceeds on the sale, will the sale of the house effect their pension compensation? 

Thank you so much for your support

[Hank 0]

I can follow the steps that @Nawal mentioned, but I cannot figure out the last step. There is no line for "Change in use of property and election" and no section 284 or 286.1. Is this line supposed to be under Real estate, depreciable property, and other properties?

[Nawal 8]

Hi Hank, the last step in only visible to the Ufile PRO users. It's ok if you don't see it.

[Maggie007 0]

Hi @Nawal, you said that line "Change in use of property and election under section 284 or 286.1" is only visible to the Ufile PRO users, so if I changed my principal property to a rental property last year, and I need to file my return with UFILE, then I have to purchase UFILE PRO?  Thanks.

[TheTaxSmith 8]

Hello Maggie007. The section you are looking for appears to be available in the Windows version of Ufile (software downloaded and files resident on your own computer) in the Personal Use Property area for capital gains. I do not know if it is available in the Online system but would be surprised if it is not. Nawal, of course, can confirm that.

Just as a point of caution or added information consider this  Election ITA 45(2) [QITA 284] - Rental property remains a principal residence

You can designate the property under certain conditions for up to 4 years as your principal residence when you switch from personal to rental.

Take a look at the article as per this link:      https://www.thomsonreuters.ca/en/dtprofessionalsuite/blog/principal-residence-disposition-special-topics.html

 

[Maggie007 0]

Thanks @TheTaxSmith. Are there any other difference between Windows version and Pro version? I'm self-employed and changed my principal property to rental this year, so the situation is a bit complex, and I don't want to miss any thing just because of the tax software features issue.

[TheTaxSmith 8]

Hi Maggie007. I used the commercial DtMax (the very big brother of Ufile) software for about 30 years. Since I retired from practice but still have some self-employed income I wanted a tax software that was resident on my computer to prepare a few family files. I chose the Ufile Windows 12 package as I needed at least 8 files to be completed but also due to the fact that I was familiar with Ufile via my use of DtMax. My cost was around $25 with taxes. So far I am impressed with what is in the software and the number of files I can do for that price.

I have helped people that use Turbo Tax and I found it cumbersome. That said familiarity with the software has an affect on what you view as cumbersome.

For you I would actually suggest purchasing the Ufile package for windows. It can easily handle your business and your file and you do not need to constantly log in to a cloud server to access it. Make sure you back up your computer daily, or continuously however so as to not lose the files and data.

If you were going to be offering the service as a tax preparer you might want to look at the Pro version.

Again I would suggest to have Nawal confirm your question about which software includes that specific area you need.

Trust the above is helpful.

[Maggie007 0]

Thank you very much @TheTaxSmith. 👍

[Nawal 8]

Hi @Maggie007, You don't have to buy the PRO version. You are considered to have disposed the property at the time of the change in use for proceeds equal to its market value (FMV), and to have reacquired the property immediately thereafter at a cost equal to its market value. So it result in a capital gain you must report but with an exemption and a rental income .

 

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

1. In 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 2020?". 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.

Then you have to report your rental income in the "Left-side menu on the Interview tab":

1. Select "Rental Income".

2.  On the page that appears to your right, click on the plus sign "+" icon to the right of the line "T776 - Rental Income property".

[LiangOn 0]

@Nawal I have the same question with @Maggie007.  I am using Ufile windows version.

Quote

You are considered to have disposed the property at the time of the change in use for proceeds equal to its market value (FMV), and to have reacquired the property immediately thereafter at a cost equal to its market value. So it result in a capital gain you must report but with an exemption and a rental income .

I agree with what you said. To change my principle residence to rental property, I need to file change in use and put my FMV (Fair Market Value). It is deemed disposition.

But my question is where/which textfield should I file the FMV value technically using Ufile windows version to inform CRA I am not actually selling the principle residence but just converted to rental property for deemed disposition? I understand the theory but need a bit more step-by-step guidance to that text field.

Thanks,

[Nawal 8]

Hi @LiangOn,for a more detailed help, we suggest you to contact our support team at support@ufile.ca. Thanks