How do I Report the Sale of my Principal Residence Turned Rental?

[krobertsonk0]

How do I Report the Sale of my Principal Residence Turned Rental?

I purchased "Home A" in May 2009 and lived there until August 2017.  I moved to "Home B" in August 2017 and kept "Home A" as a rental (one family rented it and I reported rental income on my tax return but did not claim any CCA).

I want to designate Home A as my principal residence from 2009 to 2017. 

How do I calculate my gain for schedule 3 in this specific case?

In 2017 do I have a deemed disposition at FMV (since the use of the property changed), where this FMV becomes my new ACB?  If so, if my FMV is my new cost, do I still get to add legal fees and land transfer taxes to the FMV to come up with my new ACB (as well as any capital costs incurred after 2017?

One of the tax software programs out there told me I have to fill out form T2091 (IND)-WS E "Principal Residence Worksheet" and form T2091 (IND) E (20) "Designation of a Property as a Principal Residence
by an Individual (Other than a Personal Trust)" and physically mail them into the local tax office... this seems so strange to me that this would need to be done for every sale relating to a principal residence designation... has anyone else done this?  Is this necessary?

Thank you so much in advance for any input!

[TurboTaxBryan]

Hi @krobertsonk0 

Reviewing your question, you are mostly correct in your statements.

• Deemed disposition would be at the time of change of use. You would need some form of documented FMV (e.g. a realtor assessment, not a municipal tax assessment) to support using this for your ACB calculation
• Legal and other transfer fees for the SALE of the property can be applied (I don't believe you would have had any fees associated with the change of use from principal residence to rental property)
• In terms of T2091 worksheet/form, if you complete the Principal Residence questions in TurboTax it will include these forms as part of your filing, no need to complete and file separately.

The information provided is for informational purposes only. You can also have a TurboTax Tax Expert review your entries and return for accuracy by upgrading to our TurboTax Live Assist & Review product and completing a final review before filing.