Скачать или смотреть Real Estate Sale Gone Wrong: The $20,000 CRA Penalty Lesson

A Toronto taxpayer sold multiple properties and earned hundreds of thousands in capital gains — but one unreported sale led to a $20,000 CRA penalty under subsection 163(2) of the Income Tax Act.

In Kalwa v. The King (2025 TCC 89), the Court ruled that even though some expenses like mortgage interest, utilities, and property taxes were real, they were carrying costs, not capital outlays tied to the sale. The taxpayer received only a small allowance of $1,368, and the penalty for gross negligence remained.

The case shows how critical it is to report every real estate transaction correctly. Even if you believe a property qualifies for the principal residence exemption, the sale still needs to be disclosed to the CRA.

This story offers a powerful reminder for business owners, landlords, and investors to maintain accurate documentation and clear intentions when buying or selling property.

At Cloudiverse CPAs Inc., we help clients across Canada understand how to correctly report real estate sales, claim the right exemptions, and stay compliant with CRA requirements. Our focus is on building clarity before the CRA ever calls.

Full case reference: Kalwa v. The King, 2025 TCC 89

For personalized real estate tax guidance:
Email: [email protected]

Phone: 604-200-4027

Disclaimer:
This video is for educational purposes only and does not constitute accounting, tax, or legal advice. Viewers should consult a qualified professional before acting on tax matters.

Geo Tags: