Tax · Canada
Capital gains tax.
Calculate Canadian capital gains tax on the sale of an investment. 50% inclusion rate, with principal residence exemption support.
A Canadian capital gains tax calculator. Enter the purchase price, sale price, any costs of acquisition and disposition, your other income and your province. It returns the capital gain, the taxable portion, and the tax owing at your marginal rate.
The rule it applies: only 50% of a capital gain is included in income. That taxable half is added to your other income and taxed at your marginal rate, so a capital gain is never taxed at a flat rate of its own.
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Capital gains tax
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How capital gains are taxed in Canada
Only 50% of a capital gain is taxable. The taxable portion is added to your other income and taxed at your marginal rate. Losses can offset gains in the current year, the past 3 years, or carry forward indefinitely.
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What a capital gain actually costs you
A capital gain has no tax rate of its own. Half of the gain is included in income, that taxable half is stacked on top of your employment and other income, and the whole lot is taxed at whatever marginal rate it lands in. So the "capital gains rate" people quote is really half of their marginal rate, and it moves as their income moves: the same $50,000 gain costs materially more in a year you also sold a business than in a year you did not.
The mistake people make. A two-thirds inclusion rate on gains above $250,000 was proposed in 2024, widely reported, and never enacted. A great many articles and calculators from that period were never corrected and still apply it. The inclusion rate is 50%. The other frequent error is assuming the principal residence exemption covers a cottage or a rental: it covers one property per family per year, and only for the years the property genuinely qualified.
Frequently asked questions
How much capital gains tax will I pay in Canada?
Half of the gain is taxable. Add that half to your other income for the year and it is taxed at your marginal rate, so your effective rate on the whole gain is roughly half your marginal rate.
On a $100,000 gain, $50,000 is added to income. Someone with a 43% marginal rate pays about $21,500, or roughly 21.5% of the full gain. This is why capital gains are usually the most lightly taxed form of investment income in Canada apart from eligible dividends at low incomes.
Did the capital gains inclusion rate change?
No. A change to a two-thirds inclusion rate on gains above $250,000 was proposed and widely reported, but it did not proceed. The inclusion rate remains 50%.
A great many articles and calculators published during the proposal period were never corrected and still describe the higher rate as though it were in force. Because the rules here do change, confirm the current inclusion rate with the Canada Revenue Agency before filing or before acting on a large disposition.
Do I pay capital gains tax when I sell my house?
Generally not, if it was your principal residence for every year you owned it. The principal residence exemption shelters the entire gain, though you must still report the disposition on your return.
The exemption covers only one property per family per year. A cottage, a rental, or a second home is fully taxable on the standard 50% inclusion basis, and a property that changed use partway through (a home that became a rental, for example) is exempt only for the years it genuinely qualified.
How do I calculate the adjusted cost base?
The adjusted cost base is what you paid plus the costs of acquiring and improving the asset. For a property that means the purchase price plus legal fees, land transfer tax, and capital improvements: a new roof or an addition, but not repainting or routine repairs.
Selling costs such as real estate commission and legal fees come off the proceeds rather than being added to the base. Both adjustments reduce the gain, and both need documentation, so keep the receipts for as long as you hold the asset.
Disclaimer
Estimates for educational purposes only. Consult a tax professional for the lifetime capital gains exemption, business assets, and trust scenarios.