When you sell your home or when you are considered to have sold it, usually you do not have to pay tax on any gain from the sale because of the principal residence exemption. This is the case if the property was solely your principal residence for every year you owned it. If you sold or if you were considered to have sold your property in 2022 and it was your principal residence, you have to report the sale and designate the property on Schedule 3, Capital Gains (or Losses). In addition, you also have to complete Form T2091(IND), Designation of a Property as a Principal Residence by an Individual (Other Than a P.... Complete only page 1 of Form T2091(IND) if the property you sold was your principal residence for all the years you owned it, or for all years except one year, being the year in which you replaced your principal residence.
Proceeds of disposition is usually is the amount you received or will receive for your property. In most cases, it refers to the sale price of the property. This could also include compensation you received for property that has been destroyed, expropriated, or stolen.
For more information, please visit the Canada Revenue Agency (CRA): Disposing of your principal residence
TurboTax FAQs page: Proceeds of Disposition
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