# Buying or selling a home: what changes for your taxes

> What changes for your taxes when you buy or sell a home in Canada: transfer tax, the principal residence rule, the FHSA and where to run the numbers

A home is the biggest purchase most people make, and the tax side shows up three times: when you buy, while you own it, and when you sell. Most of it is small stuff until the day it isn't.

## What do you pay when you buy?

Many provinces and some cities charge land transfer tax, and a few add extra for foreign buyers or expensive homes. A new home or a big renovation can also carry GST or HST. Run your own price through the [land transfer tax calculator](https://tax-services.ca/calculators/property-transfer-tax/land-transfer-tax) and the [closing costs calculator](https://tax-services.ca/calculators/real-estate/closing-costs), because the total can surprise you. Lawyer fees, title insurance and adjustments on the closing date all add up to more than a few bucks.

Saving for a first home? The FHSA lets you put in $8,000 a year, up to $40,000 over your lifetime, and you deduct what you contribute. You can also borrow from your RRSP through the Home Buyers' Plan. The [limits page](https://tax-services.ca/tax-numbers) has the current figures.

## What about the years you own it?

Your own home isn't taxed as income, which is why people rarely think of it as a tax matter. Rent part of it out, though, and that income is yours to report, so see the [rental income tax calculator](https://tax-services.ca/calculators/income-tax/rental-income-tax). A basement suite counts. So does a room let through a short-term rental app.

## What happens when you sell?

If the home was your principal residence for every year you owned it, the gain is normally tax-free, but you must still report the sale and name the home as your principal residence on your return. The CRA's [principal residence page](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/principal-residence-other-real-estate.html) explains how that reporting works.

Selling a rental or second property is different, because half of the gain is added to your income. Say a rental sells for a $40,000 gain: $20,000 lands on your return and is taxed at your normal rate. The [capital gains calculator](https://tax-services.ca/calculators/income-tax/capital-gains-tax) shows how much for your own numbers.

## Which papers should you keep?

Keep your purchase papers, the closing statement and receipts for big renovations. When you sell, they're what proves your cost, and without them the numbers turn into guesswork.

## Where to read more

The [property and tax guide](https://tax-services.ca/guides/property-and-tax) collects our articles on this, and the [mortgage affordability calculator](https://tax-services.ca/calculators/mortgage/mortgage-affordability) helps before you shop.

## Before you act on this page

You're reading a general overview, and it can't see your slips, your province or your family, so don't treat it as advice for your own return. If anything here doesn't match a letter from the CRA, the letter wins.

Stuck? Ask a qualified preparer or the CRA itself, and keep the [document checklist](https://tax-services.ca/checklists/documents-for-your-tax-return), the [tax calendar](https://tax-services.ca/tax-calendar) and the [filing guide](https://tax-services.ca/guides/file-your-taxes) close by. Not sure which province's rules apply to you? The [province index](https://tax-services.ca/provinces) lists them all.

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Source: https://tax-services.ca/life-events/buying-or-selling-a-home
Last updated: 2026-10-06
Independent information site. Not affiliated with the CRA. No services, no guarantee of accuracy. See https://tax-services.ca/disclaimer