CRA Real Estate Audit 2025 — Protect Your Property Sales, Stop Penalties, and Defend Against CRA Reassessments

If you’ve sold property in Canada, you’re already on CRA’s radar. In 2025, CRA’s real estate audit program is more aggressive than ever — using AI and land registry data to track every transaction, from flips to family transfers. Even honest homeowners are being reassessed for capital gains or business income, with penalties reaching tens of thousands of dollars. CRA often assumes that every sale is a taxable business activity — unless you prove otherwise. At Mackisen CPA Auditors Montreal, we specialize in defending property owners, investors, and developers against CRA and Revenu Québec real estate audits. Our CPA auditors and tax lawyers review every transaction, prove legitimate exemptions, and negotiate directly with CRA to reduce or eliminate reassessments. We protect your profits, your property, and your peace of mind.

Legal and Regulatory Framework

Income Tax Act (Canada)

• Section 9(1): Defines business income, distinguishing capital gains from business profits.

• Section 40(2)(b): Provides for the Principal Residence Exemption (PRE) when conditions are met.

• Section 152(4): Authorizes CRA reassessment of real estate transactions up to 10 years if misrepresentation is alleged.

• Section 163(2): Allows CRA to apply negligence penalties — which Mackisen can challenge or remove.
  Tax Administration Act (Quebec)
  Revenu Québec audits real estate transactions for QST, property transfer tax, and unreported gains. Mackisen defends clients on both provincial and federal levels simultaneously to ensure consistency and relief.

Key Court Decisions

Thibault v. The Queen (2022): Courts confirm that taxpayer intent and documentation determine whether a sale is capital or business income.
Venne v. The Queen (1984): CRA cannot assume “flipping” without clear evidence of intention to trade.
Guindon v. Canada (2015): Penalties can be cancelled if taxpayers demonstrate good faith and compliance.
Bédard v. The Queen (2022): Proper evidence and professional representation overturn CRA’s real estate audit assumptions.
These decisions confirm that CRA’s real estate audits are defensible — and often wrong when challenged properly.

Why CRA Targets Real Estate Audits

CRA audits real estate more aggressively than any other sector. Common 2025 triggers include:

• Multiple property sales within a short time frame.

• Claiming the Principal Residence Exemption on more than one property.

• House “flips” or assignments of purchase contracts.

• Non-resident property sales or unreported gains.

• Large renovations before sale, which CRA interprets as business activity.
  CRA assumes business intent — Mackisen proves legitimate ownership and exemption rights.

Mackisen’s Real Estate Audit Defense Strategy

1. Transaction Review: Analyze CRA’s audit notice and identify all property sales under review.

2. Classification Analysis: Prove whether the transaction is capital (investment) or business (flip).

3. Documentation Assembly: Collect contracts, mortgage statements, occupancy evidence, and correspondence to substantiate use and ownership.

4. Representation & Negotiation: Communicate directly with CRA auditors and legal officers to challenge findings.

5. Relief & Resolution: File objections and Taxpayer Relief applications to cancel penalties and interest where justified.
   Our goal: protect your exemption, reverse unfair reassessments, and preserve your investment returns.

Real Client Experience

A Montreal homeowner was reassessed $118,000 after CRA denied her principal residence claim. Mackisen presented proof of occupancy and mortgage history — CRA cancelled the full reassessment.
A Quebec real estate investor faced $260,000 in CRA penalties for alleged flipping. Mackisen demonstrated long-term investment intent and achieved a 90% reduction in taxes and fines.

Common Questions

Can CRA audit my home sale? Yes — if CRA believes it was a flip or rental. Mackisen ensures legitimate principal residence claims are approved.
How far back can CRA audit property sales? Up to 10 years, but Mackisen can limit audit scope and challenge late reassessments.
Can CRA tax my property sale as business income? Yes — if they assume you bought to sell. We prove your intent was ownership or investment.
Can non-residents be audited too? Absolutely — CRA routinely audits non-resident property transactions. Mackisen provides full representation for cross-border cases.

Why Mackisen

At Mackisen CPA Auditors Montreal, we’ve turned hundreds of CRA real estate audits into client victories. Whether you’re a homeowner, landlord, or developer, we protect your right to fair taxation. Our deep understanding of real estate tax law and audit procedure allows us to dismantle CRA’s assumptions with facts, evidence, and strategy. We act fast, argue smart, and defend relentlessly — because every property deserves the right protection.
Call Mackisen CPA Auditors Montreal today for your 2025 Real Estate Audit Defense Consultation. The first meeting is free, and your protection begins immediately.