Hello fellow Canadian taxpayers! I have looked high and low over the internet for help on my situation and I cannot find a clear answer and I am sub-reddit can give me some answers! This is my story.
2019 - Moved in to Home A as Principle Residence
2021 - Moved out of Home A and converted it to a rental property. Moved into Home B as my PR.
During the rental years, I have file all the rental income.
2025 - Sold Home A.
2026 - Getting a big headache trying to figure out my taxes.
My question - should I refile my 2021 taxes to inform the CRA that I change the "usage" of Home A so that I can lock in the FMV during that time which was quite high. I do not wish to extend the PR status of Home A as I may sell Home B soon so I need home B to be my PR.
Currently, I filed my 2025 taxes base on the entirety of the capital gain from 2019 to 2025 and divided the gains thru the years lived and rented out and paid a percentage of the gains. If I could travel back in time and file the correct paper work and lock in the fair market value at that time, I would pay a lot less taxes.
HOWEVER, I am also worry about the $8000 penalty that was mentioned on the CRA website. But I don't know if this applies to me because I did not actually sell the property.
I value any input. I unfortunately was unaware that I need to tell the gov when I change my property to a rental and hence my mistake and situation. Thank you.