Capital gains tax regarding.

How to fix a problem regarding capital gains tax and principle residence.?

• Person A owns two homes, one of which she lives in full time. The non-residential home is in a different location two hundred miles away. She gives the non residential home to niece. Come tax time Person A declares the non residential home as her principle residence even though she does not live in it, obviously to avoid paying the capital gains tax. How can this situation be remedied? Person A is an 86 year old lady who has in some respects been taken advantage of by her niece and the niece's boyfriend.

• Answer:

  The way to fix it, if there has in fact been an error, would be for Person A to request a reassessment, and to pay the taxes on that amount. Bear in mind that the property in question might have been her principal residence for some of the years, and all she did was claim the exemption for those years. http://www.cra-arc.gc.ca/E/pbg/tf/t2091_ind/README.html http://www.cra-arc.gc.ca/E/pbg/tf/t2091_ind_-ws/README.html If the above forms weren't included with the T1, CRA will likely find out about this by reviewing their records, and the sales records, and observe that Person A has not been living at the sold property. They will then follow up with Person A, and will reassess her if appropriate.