Sale of principal residence capital gain math seems to be broken. I set my ACB to be the same as the proceeds and it says I have $16,000 in capital gains. What?

Forum|Forum|2 years ago
February 27, 2024
3 replies
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I got suspicious when my manual calculation of capital gains from using CRA's form T2091(Ind) gave me a capital gain of $3500, then TurboTax said it was $16,000. So I ran the test where I set the ACB to match the proceeds and it didn't give me a zero capital gain as the answer. I don't understand what math Turbotax is doing. It is assigning me a big capital gain that doesn't exist. Am I missing something?

david-j-parkerAuthor

So, I set my house proceeds to be $100 and my ACB to be $100, so property bought and sold for the same value (zero capital gains). Then I said I lived in the house for 1 year and owned it for 10 (so, a rental for 9 years). It spit out that I had a capital gain of $40. So, for a house that didn't go up in value at all for 10 years, TurboTax is assigning 40% of the sale price as capital gains. If you change the number of years the house was a rental, the % of capital gains it assigns goes down until you hit 9 years personal property and 1 year rental, when it assigns zero capital gains. I don't get it.

GHarpe

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david-j-parkerAuthor

Hi Ginette,

I have already done this (called support). I talked to someone who was only able to check to see if I had properly filled in the boxes on the screen. She didn't know what math TurboTax was using and she couldn't explain why Turbotax was spitting out capital gains when given an equal purchase and sale price. She suggested that I needed to pay for expert tax advice, which I don't. I understand the tax. I don't understand what TurboTax is doing. I was hoping the forum might be more helpful.

Is there some way I can see what math Turbotax is doing in the background? That way I'll be able to see what the difference is between TurboTax's math, and the CRA forms that are supposed to do the same thing.

TurboTaxBrenda

Community Manager

We have tried to replicate your issue, but can't get what you are getting. Can you please let us know exactly where you are at on your return- so that we can be sure to replicate your issue. Which year did you live in this house as your principal residence?

david-j-parkerAuthor

Hi Brenda,

Interestingly, I just started a completely clean tax return - from scratch, as if I were a newborn baby. I then told Turbotax that the only thing I did in 2023 was sell my house (no income, no nothing). I then went to the sale of principal residence section, put in all my details for my house, and it spit out exactly the right answer that I was expecting - the same answer I got by filling out CRA's form T2091(Ind) manually.

So, there is something about my previous tax situation or the data I have put into other areas of my 2023 return which are affecting how TurboTax is calculating my capital gains from selling our house. Which is weird, since it should be a stand-alone calculation, as far as I understand (and clearly there is something I am not understanding).

To answer your question, we bought the property in 2014. It was rented from the summer of 2015 to the summer of 2018 when we moved back into it, then we sold it in 2023. So, We owned it for 9 years and lived in it for 6. CRA lets you claim the year you moved out as a principal residence year, so that means we can claim the personal residence exemption for 7 of the 9 years.

TurboTaxBrenda

Community Manager

Okay, well we are happy to hear that you got everything working properly.

Happy Filing!

ShaunaRC

Hey there

I've been fighting with this part for days now. There simply isn't enough fields to enter everything required to get a correct answer.

On the normal long-form cra forms, they ask for the disposition (sale price), the ACB (what you paid originally plus fees), and also the other factors in the sale (mortgage repayment, realtor fees, legal fees, paying out a spouse etc) and then you subtract that from the disposition.

They don't allow for modification of the disposition on turbo tax, so whatever you set the disposition for, is split by percent of ownership.

(Mine was 288k, 50/50 ownership, it set my proceeds as 144k, but I only actually got 30k)

I called the CRA and explained it, and they basically said "based on what the fields are asking for, you're filling it out correctly.. but based on what you're telling me, it's not calculating correctly, so I think there's information required that is missing on the software".

So idk. Best of luck to you, but you're not insane. Whoever designed this new section for 2023 did not do it very well.