T2091 /s3

For example :-
A person moved to a new house in July 2023 after renting out his previous house. There was a tenant there from August 2023 to July 2024. He sold the house in October 2024. How is it shown in S3/T2091?

It’s not clear and need more info. Which house did he live in up to July 2023? What year did he buy each house? Which house was sold in Oct 2024?

Old house he bought in 2017 and lived until july 2023. 2023 july he bought a new house and moved. His old house he sold in October 2024. The old house he rented from August 2023 to july 2024.

Tax Cycle makes it quite easy - plug those numbers in where it prompts you to. Is there something specific making this difficult?

This is not tax advice, because you are not my client. But here are some general comments.

If they started renting the property out in 2023 there was likely a change in use at that time from residence to income-producing, which would trigger a deemed disposition at that time.

A ss.45(2) election could have been made at the time to elect out of the deemed disposition. If this was done, then the sale would likely be reported in 2024 but the property would likely only be a principal residence until 2023, so a portion of any gain would likely be taxable.

If no election was made, then the deemed disposition likely has to be reported in 2023 and the exemption claimed on that return.

If you are uncertain about any of this you should seek the advice of a tax professional.

@iain.fyffe commented correctly about what to do if there is a ss.45(2) election filed. The comment about the portion of the gain likely be taxable could be mis-interpreted to mean that this can be calculated entirely on the T2091, which it can’t given that the entire property was used as a rental.

If the ss.45(2) was not filed, then you fall into ss.45(1) which means that the property was deemed sold in 2023 and repurchased at the current market rate. You will need a certified appraisal for the property evaluation.

If you are not familiar with ss.45(1), you may need a qualified person to assist you. Please note that a T2091 will NOT apply for this situation, due to the ss.45(2) not being filed, rendering ss.45(1) being wholly applicable to the sale of the property.

I will mention that I have experienced last summer CRA auditors going after Principal Residence Exemption Claims and denying the claim for these errors.