Principal Residence Changes

 In APBS Blog

On October 3, 2016, the government introduced several new changes about principal residences in Canada. From new rules for reporting the sale of your principal residence to mortgage insurance eligibility requirements, these changes are designed to support the Canadian housing market and protect the financial security of homeowners. In addition, the following changes are effective immediately for the 2016 tax year.

Individual Reporting of a Principal Residence Sale

In the past, if you sold your principal residence, you did not have to report the sale to the CRA on your income tax return. Moreover, if the property was your principal residence the entire time you owned the home, you were automatically eligible for the principal residence exemption. With the new change, any homeowner that wishes to claim the full principal residence exemption will be required to report some additional information. This includes the description of the property, the date of acquisition and the proceeds of the disposition.

Eligibility Rules for Mortgage Insurance

For new mortgage applications received on October 17, 2016 and later, the government stated that all insured homebuyers will need to qualify for mortgage insurance that is at a greater interest rate than their contract mortgage rate or Bank of Canada’s conventional five-year fixed posted rate. In addition, borrowers will only be eligible for mortgage insurance if their debt-servicing ratios are lower than the maximum levels using the new interest rates. For homeowners with an existing mortgage insurance policy, these new requirements are not applicable.

Additional Changes

The government also introduced changes for low-ratio mortgage insurance eligibility and income tax measures. For more details and information on how these changes might affect you, visit Even with all the new changes, the government is reaching out to the public for feedback on how to improve the current system further.

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