As we reported back in April, the CRA is increasingly challenging Canadians’ designation of their condominium unit as their principal residence. The distinction can result in a tax bill of tens of thousands of dollars.

The Toronto Star is now reporting that a Toronto tax lawyer is warning realtors that clients facing such a large tax bill could turn around and try and sue them:

[Toronto tax lawyer William Howse] cautions that if [realtors] have advised clients to cash in their condos or new homes too soon after construction is completed, even to use the gains to buy up, they could have clients sue for advice that is deemed to have run afoul of the taxman.

The CRA claims that their “approach has not changed, it’s just that there have been so many more condo transactions the past few years in Toronto and Vancouver” that they’ve become “a little more aggressive.”

The CRA has sent approximately 1,200 “questionnaires” regarding the circumstances surrounding the sale of condominium units have been sent to former owners in the GTA. Based on an owner’s response to the questionnaire, the CRA considers moving forward with an audit.

About 250 former owners have been asked to immediately repay the sales tax rebate they received – an average payment of $5,300.