General CRA activity
Over the last few years, CRA has focused on purchases
and sales within the real estate sector. They are reviewing
transactions for several items, such as:
– property flips on account of income;
– ineligible principal residence claims;
– commissions on sales;
– pre-sale condo assignments; and
– eligibility for the GST/HST new housing and rental
One method for reviewing such
transactions is by requiring
taxpayers to respond to a detailed
questionnaire. The questionnaire
covers items such as:
– date and details of purchase
and sale in sale
agreements, statements of adjustments, and
– details of any major renovations, building permits,
construction contracts, and municipal approvals;
– estimates of fair market values at different key points
(such as after the completion of a renovation);
– real estate listing agreements; and
– invoices, receipts, bank statements, driver’s licence,
and other items which indicates the address of the
The purchaser’s intention for the use of the property is key in
determining the appropriate tax treatment upon sale.
U.S. real estate
On June 25, 2020, CRA issued a solicitation for engaging
one or more third-party suppliers to provide “U.S. real
estate and real property data where a Canadian resident is
the owner or party to the purchase, sale or transfer” back
to, at a minimum, January 1, 2014 with ongoing provision of
new data on a monthly basis.
CRA may consider reviewing several issues in this context,
– missed disclosure of real estate not exclusively held
for personal use;
– unreported rental income, whether not reported at all
or not reported accurately;
– unreported real estate sales; and
– inappropriate claims for the principal residence
exemption on such dispositions.
ACTION ITEM: Even a fully exempt principal residence
sale was required to be reported for 2016 and later years.
Where disposals of real estate in 2016 or subsequent
years are not reported, CRA can reassess for an
unlimited period. Ensure all disposals, in Canada and
abroad, are reported on the tax return.
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