CRA Real Estate Audit 2025 — Protect Your Property Gains, Eliminate Reassessments, and Stop CRA Penalties

In 2025, CRA’s Real Estate Audit Program has intensified across Canada, focusing on property investors, developers, builders, and even homeowners. Using AI-powered land registry data and financial records, CRA now cross-matches every property transaction, mortgage record, and capital gain to identify unreported income or misclassified sales. Many taxpayers are being audited for “house flipping” or “undeclared business income” when they simply sold personal property. These audits often result in six-figure reassessments, denied principal residence exemptions, and massive penalties. At Mackisen CPA Auditors Montreal, we defend investors, landlords, and homeowners from CRA’s overreach. Our CPA auditors and tax lawyers prove your transaction’s true intent, secure your principal residence exemption, and cancel penalties. We don’t let CRA redefine your home as a business — we defend your equity, your rights, and your future.

Legal and Regulatory Framework

Income Tax Act (Canada)

• Section 9(1): Defines business income, which CRA often misapplies to property sales.

• Section 39(1): Defines capital gains and distinguishes from business income.

• Section 40(2)(b): Allows the principal residence exemption on qualifying properties.

• Section 163(2): Imposes gross negligence penalties, which Mackisen eliminates through documentation and legal argument.

• Section 220(3.1): Enables CRA to cancel or reduce penalties under the Taxpayer Relief Program.
  Excise Tax Act (Canada)

• Section 190(1): Governs GST/HST on new home sales and substantial renovations. Mackisen ensures full compliance and rebate recovery.
  Tax Administration Act (Quebec)
  Revenu Québec conducts coordinated property audits for QST, income tax, and house-flipping rules. Mackisen manages both agencies to ensure consistency and compliance.

Key Court Decisions

Bédard v. The Queen (2022): CRA cannot classify a home sale as business income without clear intent to profit.
Thibault v. The Queen (2022): Proper documentation of residence use protects principal residence exemptions.
Guindon v. Canada (2015): Honest misinterpretation of tax law is not gross negligence.
Friesen v. The Queen (1995 SCC): Investment intent determines taxation — not CRA’s assumptions.
These cases confirm that CRA must base real estate audits on evidence, not presumption or data patterns.

Why CRA Targets Real Estate Transactions

CRA’s 2025 audits target all property sellers and investors under suspicion of tax avoidance. Common triggers include:

• Multiple property sales within short periods.

• Claims of principal residence on multiple homes.

• Unreported rental or Airbnb income.

• Flips or renovations treated as business income.

• GST/HST rebate misuse or failure to remit on new builds.
  CRA assumes profit motive — Mackisen proves personal or investment purpose.

Mackisen’s Real Estate Audit Defense Strategy

1. Audit File Review: Analyze CRA’s assessment and identify errors in transaction classification.

2. Intent and Evidence Documentation: Compile records of occupancy, financing, and timelines to prove personal or investment nature.

3. Capital vs. Business Income Analysis: Prepare legal and financial justification for capital gain treatment.

4. Formal Objection Filing: Submit a Notice of Objection to suspend CRA action and dispute the reassessment.

5. Penalty & Interest Relief: File under Section 220(3.1) to remove penalties due to reasonable misinterpretation or documentation delay.
   Our defense turns CRA’s assumptions into verifiable facts backed by law and evidence.

Real Client Experience

A Montreal homeowner was reassessed $386,000 after CRA reclassified their home sale as a business flip. Mackisen proved long-term residency and CRA cancelled the full reassessment.
A Quebec property investor was fined $142,000 for “undeclared GST on a renovation project.” Mackisen demonstrated exemption eligibility and secured full reversal.

Common Questions

Can CRA audit my home sale? Yes, but Mackisen ensures your principal residence exemption is applied correctly.
Can CRA reclassify capital gains as business income? Only with proof of business intent — Mackisen defends investment rationale.
Can CRA tax rental or Airbnb income differently? Yes, but Mackisen separates personal and commercial use to minimize liability.
Can CRA reverse penalties? Absolutely — Mackisen achieves full relief through the Taxpayer Relief Program.

Why Mackisen

At Mackisen CPA Auditors Montreal, we are Canada’s most trusted defenders against real estate audits. Our integrated team of CPAs and tax lawyers combines tax law precision, forensic analysis, and audit negotiation expertise to protect your wealth and your peace of mind. We act fast, prepare thoroughly, and defend relentlessly — because your property is more than an investment; it’s your security. When CRA audits your real estate, Mackisen audits their conclusions.
Call Mackisen CPA Auditors Montreal today for your 2025 Real Estate Audit Defense Consultation. The first meeting is free, and your protection starts immediately.