Real Estate

Real estate tax in Canada turns on a few questions: was this your home, how long did you own it, and where do you live. The answers decide whether a sale is tax-free, a capital gain or business income, and what a non-resident owner must withhold and file.

How money moves through a real estate investment

The points where tax and accounting rules come into play are numbered.

Stage 1AcquirePurchase closes; land transfer tax paid on title.1
Stage 2FinanceMortgage arranged; interest tracked for rental deductions.
Stage 3Rent or developTenants sign leases, or construction begins.2
Stage 4OperateRent collected; expenses and capital cost allowance recorded.3
Stage 5RefinanceNew mortgage replaces old; use of the funds recorded.
Stage 6SellSale reported on the T1 or T2.4

Numbered points are explained below.

The four points, explained

At: Acquire

The residential property flipping rule

A quick sale can be taxed as business income rather than as a capital gain, which usually means more tax. For sales after 2022, a gain on a Canadian home or a right to buy one (such as an assignment) held for less than 365 consecutive days is business income, with exceptions for certain life events such as a death, a serious illness or a new job.

How we help

We look at your dates and circumstances before the return is filed and report the sale the way the rule requires.

At: Rent or develop

Non-resident owners and rent

If you own Canadian property from abroad, tax on your rent is withheld before you see it, and on the gross amount. Rent paid to a non-resident is subject to 25% non-resident tax, withheld by the tenant or property manager and reported on an NR4 slip; the owner can elect to file a section 216 return and be taxed on net rental income instead.

How we help

We prepare the NR6 and the section 216 return so the tax follows your actual rental profit.

At: Operate

Underused Housing Tax for past years

Earlier years stay open if you were required to file and did not. No Underused Housing Tax return or payment is required for 2025 and later years, but returns and tax for 2022, 2023 and 2024 still apply to owners who were required to file them.

How we help

We check whether you had to file for those years and, if so, bring them up to date.

At: Sell

Designating your principal residence

Missing this step can bring a penalty on a sale that owes no tax at all. When you sell a home you lived in, the sale and the principal residence designation must be reported on Schedule 3 and Form T2091(IND); a late designation may be accepted, but a penalty can apply.

How we help

We report the sale and the designation on your return for the year you sell.

Services that apply

All services

Tax Returns & Planning
Rental income, home sales and the principal residence designation are reported on your T1 each year.
Cross-Border Tax
Non-resident owners need withholding, the NR6 and section 216 filings, and a section 116 certificate when they sell.
Tax Representation
Home sales and short holding periods are a frequent subject of CRA enquiries.
Bookkeeping & Accounting
Landlords with several units need rent, expenses and capital costs recorded through the year.
Estates & Trusts
When an owner dies, their property is generally treated as sold at fair market value, and the final return reports the result.

Questions

Still have a question?

I sold my home and made no taxable gain. Do I still report it?

Yes. The CRA only allows the principal residence exemption if the sale and designation are reported on your return.

I sold a condo assignment within a year. Is that a capital gain?

Probably not. A right to acquire a housing unit held less than 365 consecutive days falls under the flipping rule unless a listed life-event exception applies, so the gain is business income.

Do I still need to file the Underused Housing Tax return?

Not for 2025 or later. If you were required to file for 2022, 2023 or 2024 and did not, those years are still open.