Updated: Oct 5
If you have sold your principal residence, beginning 2016 tax year, you have to report the disposition of principal residence on your income tax and benefit return. Even if the property was solely your principal residence for all years that you owned it and your gain on the sale may be fully sheltered from tax, the sale must be reported on your tax return and designate the property as your principal residence. Beginning 2017 tax year, you also have to file Form T2091 - Designation of a Property as a Principal Residence by an Individual (other than a Personal Trust) with your tax return.
The CRA has indicated that they may be able to accept a late designation in certain circumstances, but a penalty may apply - the lesser of the following amounts:
$100 for each complete month from the original due date to the date the request was made in a form satisfactory to the CRA.
In addition, the CRA has indicated that depending on the facts and circumstances, penalty relief could be available. Additional information can be found here: https://bit.ly/2oVYnW
Failure to report the disposition could result in the CRA reassessing the return outside the normal reassessment period (3 years from the date of issue of the original notice of assessment).