Sale of principal residence capital gain math seems to be broken. I set my ACB to be the same as the proceeds and it says I have $16,000 in capital gains. What?

So, I set my house proceeds to be $100 and my ACB to be $100, so property bought and sold for the same value (zero capital gains). Then I said I lived in the house for 1 year and owned it for 10 (so, a rental for 9 years). It spit out that I had a capital gain of $40. So, for a house that didn't go up in value at all for 10 years, TurboTax is assigning 40% of the sale price as capital gains. If you change the number of years the house was a rental, the % of capital gains it assigns goes down until you hit 9 years personal property and 1 year rental, when it assigns zero capital gains.  I don't get it.

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Hi Ginette,

I have already done this (called support). I talked to someone who was only able to check to see if I had properly filled in the boxes on the screen. She didn't know what math TurboTax was using and she couldn't explain why Turbotax was spitting out capital gains when given an equal purchase and sale price. She suggested that I needed to pay for expert tax advice, which I don't. I understand the tax. I don't understand what TurboTax is doing.  I was hoping the forum might be more helpful.

Is there some way I can see what math Turbotax is doing in the background? That way I'll be able to see what the difference is between TurboTax's math, and the CRA forms that are supposed to do the same thing.

We would like to assist you. First we will need to know which TurboTax software you are using- if Online or Desktop version? 

Online version.

We have tried to replicate your issue, but can't get what you are getting. Can  you please let us know exactly where you are at on your return- so that we can be sure to replicate your issue. Which year did you live in this house as your principal residence?

Hi Brenda,

Interestingly, I just started a completely clean tax return - from scratch, as if I were a newborn baby. I then told Turbotax that the only thing I did in 2023 was sell my house (no income, no nothing). I then went to the sale of principal residence section, put in all my details for my house, and it spit out exactly the right answer that I was expecting - the same answer I got by filling out CRA's form T2091(Ind) manually.

So, there is something about my previous tax situation or the data I have put into other areas of my 2023 return which are affecting how TurboTax is calculating my capital gains from selling our house. Which is weird, since it should be a stand-alone calculation, as far as I understand (and clearly there is something I am not understanding).

To answer your question, we bought the property in 2014. It was rented from the summer of 2015 to the summer of 2018 when we moved back into it, then we sold it in 2023. So, We owned it for 9 years and lived in it for 6. CRA lets you claim the year you moved out as a principal residence year, so that means we can claim the personal residence exemption for 7 of the 9 years.

Okay, well we are happy to hear that you got everything working properly. 

Happy Filing!

No, everything is not working properly. I have now played around with it in more ways and found it even weirder.

If I pretend that our house was two different houses, each worth half as much as our actual house is worth. I own 100% of the half house and my wife owns 100% of her half house, and we input them as two separate properties (but with the same address), it does the math correctly and gives the correct capital gain.

If fill in the page as a joint property, with 50% valuations to each of us and with our shares of the ACB input accordingly, it assigns a $33,000 capital gain to each of us. It should be ~$3500.

Anyways. I'll submit it as two distinct properties (with the same address....) to make the math work correctly, but something very odd is happening with the math when I try to make it a joint property.

In order for me to make the math work correctly as a joint property, where it says "wife's adjusted cost base" I have to put the full combined adjusted cost base of us as a couple, then I have to put it in again where it says "David's adjusted cost base", implying that we've paid twice as much to purchase and improve the property as we actually have.

Would you like for us to put in for a callback, so that we can have someone verify what is happening and why you aren't getting the proper amounts? 

Hey there

I've been fighting with this part for days now. There simply isn't enough fields to enter everything required to get a correct answer.

On the normal long-form cra forms, they ask for the disposition (sale price), the ACB (what you paid originally plus fees), and also the other factors in the sale (mortgage repayment, realtor fees, legal fees, paying out a spouse etc) and then you subtract that from the disposition.

They don't allow for modification of the disposition on turbo tax, so whatever you set the disposition for, is split by percent of ownership.

(Mine was 288k, 50/50 ownership, it set my proceeds as 144k, but I only actually got 30k)

I called the CRA and explained it, and they basically said "based on what the fields are asking for, you're filling it out correctly.. but based on what you're telling me, it's not calculating correctly, so I think there's information required that is missing on the software".

So idk. Best of luck to you, but you're not insane. Whoever designed this new section for 2023 did not do it very well.

I also called support, and they also suggested I pay extra for expert help - after explaining that I understood the taxes, and that it was their software that didn't seem to understand the taxes.

I haven't filed yet because I found multiple areas where things didn't make sense, but I did already pay so I could access the PDF download of the full forms. I can solidly confirm that the fields filled out on the forms submitted to the CRA based on the softwares questions are not good.

In my case, no combination of numbers real or fake was calculating the proceeds correctly. It was always reporting a 0 capital gain which is true, but it was splitting my disposition amount by the ownership percent every time.

(I entered 50% ownership for me, 50% ownership for my ex, and it split the sale price of 288 by 50% and assigned me a 144k proceed value...)

They don't have a field to report the factors of the sale - such as repaying outstanding mortgage, realtor fees, lawyer fees, and paying out a spouse etc... so it will never be correct because it's not correcting for things properly. 

The actual CRA form "schedule 3" has a space to adjust for these things, and includes them in whether or not you had a gain/loss. This software does not.

It's just bad.

Can you please contact our TurboTax phone support so that they can view your return and send your case to be investigated?

Thank you for choosing TurboTax

ShaunaRC,

I was able to finally jerry-rig turbotax to output the right capital gains by figuring out what (wrong) math it was doing in the background, then correcting my inputs to get it to spit out the right output.

The main issue it had for me was it was asking for my spouse's and my portion of the ACB, so I put in half of it for my wife, and half for me into each box, the same way you do on CRA's paperwork - which, as you also discovered, spits out an extremely wrong answer. It turns out Turbotax needs you to put in the ENTIRE ACB in each of the boxes, not split between spouses. Then it uses the percentage of ownership you put in for each spouse to split the ACB into whatever proportion and does the math from there.

Which is clearly the wrong way to do it, since now there's no way to individually adjust the ACBs for each spouse - it's also deeply confusing since the form asks for a split ACB, then doesn't do the math for a split ACB.

In the end, figuring out this one silly page on Turbotax ate about three days of my life. It's half-baked and needs a serious redesign.

@david-j-parker 
Thanks for the reply - I actually did end up doing the exact same thing myself the other night after losing my freaking mind for DAYS.

For me, I entered the total amount of money we "made" after subtracting the mortgage repayment, realtor fees, and legal fees from the total of the house sale, which was only $48,XXX - In the disposition box.
I literally typed into google "What percent of $48,XXX is $30,XXX (which was what I personally received)" and it spat out 67.something %, which I then entered into the first box for MY ownership percent. I then subtracted that percent from 100, and entered the remaining percent into HIS ownership percent.

It didn't matter AT ALL what I put in the ACB, I could put in ANY number in the world and it didn't change the final summary of "proceeds", but I still put the original purchase price + fees into it. It ended up splitting our joint "profits" into our corresponding percent's, and displaying my actual proceed amount correctly, which was $30,XXX.

Love that we have to do some weird work-arounds to get the software to come up with the correct answers, after getting no help from the actual support staff... but... what can you do I guess. It didn't matter how much I tried to tell various CSR's that there was an actual error in the software, they just acted like I was stupid. I hate it here.