I still hear people say that you are allowed to sell a principal residence each year and avoid paying tax on that gain. That is not true. If your plan is to buy a house, move into it, fix it up and sell it – and you want to repeat that a couple of times, it is quite likely that Canada Revenue Agency is going to be wondering about you.
They will be wondering how you earn your living, are you a contractor, or a real estate agent? If CRA can show that you are earning a portion of the income, you need to support your lifestyle by selling property that you call your principal residence. They are going to be asking you to pay tax on those gains.
They will consider you to be in the business of selling property. If you are moving, there is usually a reason, you got a new job, you want your kids to go to different schools, etc. Something other than you think you can make some money by selling your house.
Since 2016, we have been reporting every property sale that is made on our personal income tax returns. CRA is building a database of who sold what, they are paying attention to people who are moving frequently. You can make money on your principal residence and not pay tax on it, you just can’t do that very often.
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