What Is Capital Gains Tax in Canada?
Capital gains tax in Canada is the tax you pay on the profit from selling a capital asset — such as an investment property, stocks, or land — for more than you paid for it. Canada does not have a separate flat capital gains tax rate; instead, 50% of the capital gain (called the taxable capital gain) is included in your income and taxed at your combined marginal rate (CRA, 2026).
The capital gain is calculated as: sale price − adjusted cost base (ACB) − selling costs. Your ACB is your purchase price plus all acquisition costs and capital improvements made during ownership. Canada's inclusion rate approach means the taxable portion is added to your regular income for the year of sale — the larger the gain, the higher the bracket it can push you into.
Capital gains apply to investment properties, rental properties, land, stocks, cryptocurrency, business assets, and vacation homes. The principal residence exemption (PRE) can eliminate CGT on a qualifying primary home. Capital losses from dispositions can offset gains in the same year, or be carried back three years and forward indefinitely.
How Much Is Capital Gains Tax in Canada? — 2026 Inclusion Rates
In Canada, capital gains tax is calculated by multiplying 50% of your capital gain by your combined federal and provincial marginal tax rate. On a $100,000 capital gain, your taxable capital gain is $50,000. At a 43% combined marginal rate, your estimated capital gains tax is $21,500. Marginal rates range from approximately 20% to 53% depending on province and income level (CRA, 2026).
50% Inclusion Rate Confirmed for All Capital Gains in 2026
The capital gains inclusion rate in Canada is 50% flat for all capital gains realized in 2026 — for individuals, corporations, and trusts on all dispositions. The proposed increase to 66.67% on gains above $250,000 (2024 federal budget) was cancelled by the Government of Canada on March 21, 2025. CRA has reverted to the enacted 50% rate for all dispositions.
50% Inclusion Rate — All Capital Gains in Canada (2026 Confirmed)
50% of every capital gain is your taxable capital gain — regardless of the size of the gain. On a $200,000 capital gain, your taxable capital gain is $100,000. On a $500,000 capital gain, your taxable capital gain is $250,000. The 50% inclusion rate has been in effect since 2000 and returned to a universal flat rate after the 66.67% proposal was cancelled.
The Proposed 66.67% Rate — Cancelled March 2025
The April 2024 federal budget proposed raising the inclusion rate to 66.67% on annual gains above $250,000 for individuals. CRA briefly administered the proposed rate for gains realized June 25, 2024 – December 31, 2024, pending legislation. The Government of Canada announced on March 21, 2025 that it does not intend to proceed with the proposed increase. CRA has reverted to the enacted 50% rate for all dispositions. Taxpayers who filed under the proposed 66.67% rate for June 25–December 31, 2024 gains may need to refile — see CRA guidance.
How Your Marginal Tax Rate Applies
Your combined federal + provincial marginal rate determines how much capital gains tax you owe. Approximate combined top rates by province in 2026: Ontario ~53%, BC ~54%, Alberta ~48%, Quebec ~54%. Most property sellers fall in a 40–50% combined bracket for the year of sale, as the taxable capital gain is added on top of all other income for the year — which can push you into a higher bracket.
Capital Gains Tax on Real Estate in Canada
Capital gains tax on real estate in Canada uses the same 50% inclusion rate as all other capital gains — there is no separate CGT rate for real estate. The gain is the sale price minus your adjusted cost base (ACB) and selling costs. Investment properties, rental properties, vacation homes, and land are all subject to capital gains tax on sale (CRA, 2026).
Selling an Investment Property
Your ACB for an investment property includes: purchase price, acquisition costs (legal fees, land transfer tax paid at purchase, commissions at purchase), and all capital improvements — renovations that add permanent value, not ongoing maintenance or repairs. Note that capital cost allowance (CCA) previously claimed on a rental property reduces your ACB — and recaptured CCA is taxed as 100% business income, not as a capital gain. Selling costs (commissions, legal fees, staging) are deducted from the sale price to determine net proceeds. Capital losses can offset other gains in the same year and carry forward indefinitely.
Capital Gains Tax on Land Sales in Canada
Raw land is a capital asset — no principal residence exemption applies to land-only dispositions. Your ACB includes the purchase price plus eligible carrying and development costs. Land held primarily for resale may be treated as inventory (100% business income) rather than a capital asset, depending on intent at the time of purchase. Agricultural land may qualify for the Lifetime Capital Gains Exemption (LCGE) if it meets CRA's qualifying farm property criteria.
Calculating Tax on a House Sale in Canada
Not all house sales trigger capital gains tax in Canada. If the home was your principal residence for every year you owned it, the principal residence exemption (PRE) eliminates the capital gain entirely. If you owned the home for some years as a rental before converting it to a principal residence — or vice versa — the gain is prorated and only the non-designated years are taxable (CRA).
The Principal Residence Exemption
Principal Residence Exemption — Eliminate Capital Gains Tax on Your Primary Home
The PRE exempts capital gains from tax for each year the property is designated as your principal residence. If owned 10 years and designated all 10 years — full exemption, no capital gains tax owed. A $400,000 gain on a fully designated primary home is entirely tax-free. Partial exemption: if the home was a rental for 3 of 10 years, roughly 7/10 of the gain may be exempt (plus the +1 rule for the acquisition year). You must report the sale to CRA on Schedule 3 even when fully exempt — required since 2016. Only one property per family unit can be designated as principal residence per year.
When CRA Treats the Sale as Business Income
⚠️ Anti-Flipping Rule — Property Sold Under 12 Months = Business Income (100% Taxable)
Effective January 1, 2023, CRA's anti-flipping rule deems profit from a residential property sold within 12 months of purchase as 100% business income — not a capital gain. Business income is fully taxable at your marginal rate with no 50% inclusion benefit and no principal residence exemption. Exceptions apply for qualifying life events: death in the family, divorce or separation, serious illness or disability, employment relocation of 40+ km, insolvency, or involuntary destruction of the property. CRA retains audit power beyond 12 months — properties held longer may still be assessed as business income if flipping was the primary intent at purchase.
See also: house flip tax calculator and capital gains vs. business income on a flip in Canada.
How the Capital Gains Tax Calculator Works
Enter your adjusted cost base, sale price, selling costs, province, and marginal tax rate to estimate your capital gains tax in seconds. The calculator applies the 2026 CRA inclusion rate of 50% and prorates the principal residence exemption automatically if you held the property as your principal residence for only part of the ownership period.
Estimate Only — Consult a Tax Professional
This calculator provides general estimates based on publicly available CRA rules as of April 2026. Tax situations vary by province, income, property type, and individual circumstances. Consult a licensed accountant or tax advisor before filing or making financial decisions. Read our disclaimer →
How to Use This Calculator: Step by Step
- Enter your adjusted cost base. Enter the adjusted cost base (ACB) of the property — your original purchase price plus all eligible acquisition costs (legal fees, land transfer tax, real estate commissions paid at purchase) and the total cost of capital improvements made during ownership. Capital improvements add permanent value to the property, such as additions or a kitchen renovation. Do not include ongoing repairs, maintenance, or mortgage interest in your ACB.
- Enter your sale price and selling costs. Enter the final sale price of the property and your total selling costs — real estate commissions, legal fees at sale, and other disposition costs. The calculator subtracts these selling costs from the sale price to determine your net proceeds. The difference between net proceeds and your ACB is your capital gain.
- Select your province and marginal tax rate. Select your province of residence and your estimated combined federal and provincial marginal tax rate for the year of sale. Capital gains tax in Canada combines federal and provincial income tax rates. Your combined rate depends on your total annual income including the taxable capital gain. If unsure, the calculator provides a reference table of approximate combined rates by income level and province.
- Indicate whether the principal residence exemption applies. Select whether the property qualifies for the principal residence exemption (PRE) in whole or in part. If the property was your primary home for every year you owned it, select full exemption — your taxable capital gain is $0. If it was your principal residence for only some of the years owned, enter the number of qualifying years and the calculator will prorate the exemption automatically.
- Review your estimated capital gains tax owing. The calculator displays your capital gain, taxable capital gain (after applying the 50% CRA inclusion rate and any PRE proration), and your estimated capital gains tax at your selected marginal rate. The result is an estimate based on CRA rules as of April 2026. Actual tax owing depends on your full annual income, other capital gains or losses, and your province of residence. Consult a licensed tax advisor before filing.
What to Enter — Adjusted Cost Base and Sale Price
ACB components include: original purchase price, legal/notary fees at purchase, land transfer tax paid at purchase, real estate commissions at purchase, survey costs, title insurance, and capital improvements. Do not include mortgage interest, property taxes, insurance, repairs, or management fees — these are deducted against rental income, not against your capital gain. For a full list of eligible acquisition costs at purchase, see the closing cost calculator.
How the Tax Estimate Is Calculated
The calculator follows four steps: (1) Capital gain = net proceeds (sale price − selling costs) − ACB. (2) Taxable capital gain = capital gain × 50% inclusion rate. (3) PRE proration (if applicable) = taxable capital gain × (non-designated years ÷ total years owned). (4) Estimated tax = taxable capital gain × combined marginal rate. The result is an estimate — it does not account for capital loss carryforwards, alternative minimum tax, or other year-specific factors.
Example: $300,000 Gain on a Canadian Investment Property
On a $300,000 capital gain in Ontario at the 2026 CRA inclusion rate of 50%, your taxable capital gain is $150,000. At a combined federal + Ontario marginal rate of 43.16%, your estimated capital gains tax is approximately $64,740.
| Item | Amount | Notes |
|---|---|---|
| Sale price | $820,000 | Gross sale price before commissions |
| Selling costs (commissions + legal) | −$20,000 | ~2.5% commission + $3K legal |
| Net proceeds | $800,000 | Sale price minus selling costs |
| Adjusted cost base (ACB) | −$500,000 | Purchase $480K + improvements $15K + acquisition $5K |
| Capital gain | $300,000 | Net proceeds minus ACB |
| Inclusion rate | × 50% | 2026 CRA enacted rate — flat for all gains |
| Taxable capital gain | $150,000 | Added to income for the year |
| Combined marginal rate (Ontario) | × 43.16% | Federal + Ontario combined — income-dependent |
| Estimated capital gains tax | ~$64,740 | Estimate only — actual depends on full year income |
| ACB Component | Amount | Eligible for ACB? |
|---|---|---|
| Purchase price | $480,000 | Yes |
| Kitchen/bathroom renovation | $15,000 | Yes — capital improvement |
| Legal fees at purchase | $3,000 | Yes |
| Land transfer tax at purchase | $2,000 | Yes |
| Total ACB | $500,000 | — |
| Ongoing repairs during ownership | — | No — deduct against rental income instead |
| Mortgage interest during ownership | — | No — operating cost, not capital |
| Property tax during ownership | — | No — operating cost, deductible as rental expense |
Frequently Asked Questions — Capital Gains Tax Canada
Sources
- CRA — Capital gains overview (Line 12700) — Canada Revenue Agency. Accessed April 2026.
- CRA — Canada's new anti-flipping tax on residential real estate (2023) — Canada Revenue Agency. Accessed April 2026.
- CRA — Sale of your principal residence — Canada Revenue Agency. Accessed April 2026.
- CRA — Update on administration of proposed capital gains taxation changes (2025) — Canada Revenue Agency. Accessed April 2026.
- Department of Finance Canada — Government will not proceed with capital gains inclusion rate increase (March 21, 2025) — Finance Canada. Accessed April 2026.
This calculator provides general estimates based on publicly available CRA rules as of April 2026. Tax situations vary by province, income, property type, and individual circumstances. Consult a licensed accountant or tax advisor before filing or making financial decisions. Read our disclaimer →
▶ Thinking About Flipping a Property?
- Open House Flipping CalculatorEstimate all-in profit — acquisition, renovation, carrying costs, and capital gains tax.