Capital Gains Reporting

My client purchased a principal residence in 2021 and sold it in June 2023. She then purchased another principal residence in June 2023 and sold it Dec 1st 2023. She had a family situation that required her to move from her one bedroom condominium to another residence.

Both turbo tax and studio tax keep giving my errors when I tried to net file.

The sell costs were properly indicated on forms T2091 and T2092, but there is no place on the form to show you have held the property less than 365 days on the second property.

Schedule 3 was filled in on line 17900 indicating that these properties were “her principal residences for all or some of the years she owned them”.
Line 17905 was marked yes, line 17906 was marked item 2, thus her second principal residence is not a flipped property, but still exposed to a capital gain due to the new flipping rule.

My question is " what section i.e.1 to 10 do I use to report the capital gain from the sale of the second residence, it looks like either section 5 or 8". I do have all the required information to record the capital gain.

It would have been nice if CRA or the soft wear providers would have supplied decent examples on how to properly complete the capital gain, through both the T2091/2’s and Schedule 3.

My client is not in the business of buying and selling houses, rather a 60 year lady working as a waitress and earning less than $40K per year, and yet in the wisdom of our tax people, she will have to pay $13k in Capital Gains. Does not seem fair. In previous years she would not have any Capital Gain.

I would appreciate any comments and how to proceed in completing the Schedule 3.

TaxCycle lets you deal with the flipping rule on Schedule 3. I assume the other programs allow this. You’ll have to indicate which of the exclusions, if any, your client meets.

I had a client buy and sell a home within a month in 2023. She was able to avoid the flipping rules because, after paying real estate commission on the sale, there was no capital gain.

Thanks Kevin, unfortunately after using both the adjusted cost basis on the purchase as well as the selling expense, she still has to pay Capital Gains.

I will look up on Tax Cycle, again thanks.