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Error when Disposing of a Principal Residence Property

Note: 
  • this article applies only for T1 filings in tax year 2016 and onwards
  • this article applies only to spouses disposing of a shared principal residence property

Issue

Preparers encounter an error when resolving the T1 form question, "Did you dispose of a property (or properties) in 2016 for which you are claiming a Principal residence exemption?" in the affirmative.
 
The cause of the error is unnecessarily entering information in a spouse's "S3 Principal Residence Detail" form. The necessary information is provided under the taxpayers T1 return.
 
This article illustrates the method to correct the error, answer in the affirmative, and populate the necessary forms correctly.

Error

The error occurs when unnecessary information is entered into the "S3 Principal Residence Detail" form of a spouse.
 
The following screenshot displays several examples of unnecessary entries that must be cleared:
 

Resolving the Error

To resolve an existing error, delete the unnecessary information and populated columns in the spouse's "S3 Principal Residence Detail" form.

  1.  Delete the unnecessary information from the populated fields.

  2.  Right-click on the field:

  3.  Select the "Delete column" option; the column deletes.

The error should now be resolved. 

Correctly Completing the Disposal of a Principal Residence Property 

On a T1 form, preparers see this option for a taxpayer ("Spouse 1"):
 
User-added image
 
When answering in the affirmative, preparers complete the principal residence detail section of Form S3, "Capital Gains (or Losses) in 2016" for Spouse 1 by selecting one of the three options related to the sale of the property:
 
User-added image
 
Note: for assistance in determining what constitutes a principal residence Chapter 6 of the CRA document "Capital Gains - 2016", located here on the CRA website
 
After the appropriate selection is made, the preparer completes the "S3 Principal Residence Detail" form for Spouse 1, entering the required information under the "Amount" column, including the percentages of the sale reported by Spouse 1 and Spouse 2, as well as property information such as street name, year of acquisition, and more.
 
In this example, the preparer has assigned the percentage of the sale reported by Spouse 1 and Spouse 2 at 50% each:
 
User-added image
 
The preparer opens the T1 for Spouse 2 and selects the "Yes" option in the question, "Did you dispose of a property (or properties) in 2016 for which you are claiming a principal residence exemption"".
 
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The preparer completes Form S3, "Capital Gains (or Losses) in 2016" for Spouse 2, selecting the same designation for the property as Spouse 1 did:
 
User-added image
 
The "Proceeds of disposition" fields populate according to the percentages determined in the "Principal Residence Detail" form for Spouse 1 and Spouse 2.
 
The preparer does not complete a "Principal Residence Detail" form for Spouse 2; the necessary information has been provided under Spouse 1.
 
 

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