What are the implications of the CRA's crackdown on principal residence exemptions for Canadian homeowners?

The implications of the CRA's crackdown on principal residence exemptions for Canadian homeowners are far-reaching. Homeowners must now navigate stricter guidelines to ensure their properties qualify for the exemption. The primary implication is the increased likelihood of audits, as the CRA is focusing on compliance to prevent tax evasion.

This heightened scrutiny means that homeowners must maintain detailed documentation proving their property is their principal residence. Records such as utility bills, tax documents, and residency evidence will be crucial during any examination by the CRA.

Additionally, any missteps or failures to comply with the CRA criteria could lead to significant tax liabilities. Homeowners could face penalties and be required to pay capital gains taxes that would have otherwise been exempted, leading to unexpected financial burdens.