Many home sales are tax-free in the US and Canada, but each country gets there by a different rule, and both still want the sale reported in some cases. As of October 2026, the US excludes up to $250,000 of gain ($500,000 on a joint return) if you owned and lived in the home 24 of the last 60 months. Canada exempts a home you designate as your principal residence. We found no matching home exemption in India.
How does the US treat a home sale?
The IRS lets you exclude up to $250,000 of gain from the sale of your main home, or $500,000 if you file jointly. You or your spouse must have owned the home for at least 24 months of the five years before the sale. You and your spouse must each have used it as a home for at least 24 months of those five years. Generally you cannot use the exclusion if you excluded gain on another home within the two years before the sale.
You must report the sale if you receive Form 1099-S, even when all the gain is excludable. You must also report it when you cannot exclude all of the gain, using Form 8949 and Schedule D. Publication 523 has the partial exclusion and nonqualified use rules.
How does Canada treat it?
Canada's equivalent is the principal residence exemption. For a 2025 sale, the CRA says to report the sale on Schedule 3, Capital Gains or Losses, and complete Form T2091(IND). The CRA allows the exemption only if you report the sale and the designation on your return.
Only one home can be designated as your family's principal residence for each year since 1982. If the property qualified for every year you owned it, or all years but one, you complete only page 1 of the form. A year that is not designated can leave part of the gain taxable. Losses on a home are not deductible, because it is personal-use property.
If the home was owned for less than 365 consecutive days, the CRA generally treats the result as business income unless a listed life event applies. A change in use, such as converting the home to a rental, is treated as a sale and reacquisition at fair market value. If you were not a Canadian resident for the whole time you owned the property, other rules apply, and the CRA tells you to contact it.
What about India?
We found no India rule that excludes gain on a main home the way the US and Canada do. Capital gains on a house in India are taxed under the capital gains rules, and relief comes from reinvesting in another house. Our India capital gains guide explains the rates and the reinvestment exemption for NRIs, and the TDS page covers tax withheld by the buyer. Confirm your own case with a Chartered Accountant in India. This firm is a US CPA firm and does not prepare Canadian or Indian returns.
Side by side
| Question | United States | Canada | India |
|---|---|---|---|
| Main-home relief | Exclusion of $250,000 or $500,000 | Principal residence exemption | No exclusion; reinvestment relief |
| Report a fully tax-free sale? | Only if you get Form 1099-S or cannot exclude all gain | Yes, Schedule 3 and Form T2091(IND) | Report the gain |
| Time test | 24 of 60 months | Designation by year | Not applicable |
Worked example
These figures are invented. Neha and Rohit lived in their Aurora home for six years. They sell it at a gain of $430,000 and file jointly. They meet the ownership and use tests, and the gain is within the $500,000 limit, so they owe no federal tax on it. They report the sale because they receive Form 1099-S. A cousin who sold a Toronto condo that was his principal residence for every year he owned it reports the sale on Schedule 3, designates it on Form T2091(IND) and owes no Canadian tax on that sale.
Common mistakes
- Skipping the report because the gain is exempt.
- Assuming a rule from one country applies in another.
- Forgetting a rental period that makes part of the gain taxable.
- Ignoring that a US citizen or resident may still report a foreign home sale in the US.
What to do next
Gather the purchase and sale documents, the dates you lived in the home and any rental period, and decide which country's return reports the sale. Then compare the rules in our capital gains comparison. This is general information, not advice, for sales in 2025 and 2026.
Frequently asked questions
Do I owe US tax if I sell my home and live in Canada?
A US citizen or resident generally reports a home sale on the US return, and the exclusion can apply if the tests are met. Check Publication 523 for your facts.
Does Canada tax the sale of my principal residence?
Generally not, if the home was your principal residence for every year you owned it and you report and designate it.
Must I report a sale that is fully exempt?
In Canada, yes, because the exemption depends on reporting. In the US, you report it if you receive Form 1099-S.
Can I claim the US exclusion twice in a row?
Generally not if you excluded gain from another home sale in the previous two years.
Official sources
- IRS: Topic no. 701, Sale of your home
- IRS: Publication 523, Selling Your Home
- CRA: Principal residence and other real estate
This page summarizes public guidance in plain language. If anything here differs from the official source, the official source controls.
General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.