Capital Gains Tax Calculator

The 50% inclusion rate

In Canada only half of a capital gain is taxable. The taxable amount is gain × 50%, added to your income and taxed at your marginal rate. The proposed increase to a two-thirds (66.67%) inclusion rate was cancelled in March 2025, so the 50% rate continues for all individuals in 2026 (confirmed July 2026).

The capital gain

gain = proceeds − selling costs − ACB − capital improvements. Proceeds is the sale price; ACB (adjusted cost base) is what you originally paid plus purchase costs; selling costs are commissions and legal fees; capital improvements (renovations that add lasting value, not repairs) increase your ACB on property. Ordinary repairs and maintenance do not count.

The tax on the gain

We compute tax = T(other income + taxable gain) − T(other income), where T is your combined federal + provincial income tax including the basic personal amount credits, Ontario surtax and health premium, and the Quebec abatement where they apply. This captures the fact that a large gain can push you into higher brackets. The effective rate shown is that tax divided by the full gain (not the taxable half), so it never exceeds about half your top marginal rate. The top marginal rate is the combined rate on the last $100 of income at the top of the stack; each extra $1 of gain adds only 50 cents of taxable income, so it costs half that rate.

From sale price to what you keep

The bridge chart walks the sale in order: sale price − selling costs − ACB − improvements = capital gain, then capital gain − federal tax − provincial tax = after-tax profit. The two tax bars are the hero's figure split in two (T computed for each level separately, with the surtax and health premium in Ontario's bar and the federal bar after the Quebec abatement), rounded to the dollar so they add up to it. Your net proceeds are that after-tax profit plus the cost base and improvements you get back.

Spreading a sale over two tax years

For stocks and funds, the chart sells a share x of the position this year and the rest next year: total = tax(x × gain, this year's income) + tax((1 − x) × gain, next year's income), for x from 0% to 100% in 5% steps, using the same function as the hero. Next year's other income is taken to be this year's unless you switch on a different figure. It plots tax if you sell it all now − total: above the dashed $0 line (selling it all this year) a split saves tax, below it a split costs more, which happens when next year's income is higher. The tax is not a smooth bowl, since credit phase-outs and the health premium put kinks in it, so two separate splits can tie for the most saving, and both are named. A December and January sale is the classic version. Next year's part is taxed with 2026 brackets (next year's will be indexed a little higher, which only adds to the saving), the price is assumed to hold until you sell, and the tax on the second part is paid a year later. A single property can't be split this way, but if the buyer pays you over several years you may be able to claim a capital gains reserve and report the gain over up to five years (at least a fifth each year). A large gain in one year is also when the alternative minimum tax, which this tool doesn't model, is most likely to apply.

What each extra dollar of gain costs

The step chart runs your gain from $0 to about one and a half times its size or more (rounded up so the axis reads in round amounts) in 300 slices, one of which ends exactly at your gain, and plots, for each slice, (tax(g + slice) − tax(g)) ÷ slice: the rate on that part of the gain. Each step up is a federal or provincial bracket edge, the Ontario surtax, the health premium or a basic personal amount phase-out that the taxable half crosses. The slices up to your gain add up to the hero tax exactly, and the dashed line, tax(g) ÷ g, reaches the effective rate on the metric card at your gain. When your other income is low, the basic personal amount credits it leaves unused cover the tax on the first part of a gain; the chart marks where that tax-free stretch ends, worked out with the same tax function, and if your whole gain falls inside it, the chart runs on far enough to show where tax starts.

The bracket table

Each row is a federal or provincial bracket, the slice of your taxable gain that lands in it and the tax at that bracket's rate, before credits. The rows under the table walk from that bracket tax to the tax you owe: less any basic personal amount credit your other income leaves unused that the gain's tax uses up, plus any credit that phases out as the gain lifts your income (the enhanced federal basic personal amount at high incomes, Yukon's, which mirrors it, and Manitoba's), less the Quebec abatement, plus the Ontario surtax and health premium. Every figure is rounded to the dollar so the column adds up to the tax you owe.

Tax on this gain across Canada

The same gain and other income run through each province's and territory's own brackets, credits, surtax and abatement, sorted from the least tax to the most. Your bar equals the hero. Provincial tax follows where you lived on December 31 of the year of the sale.

Principal residence exemption

The sale of your principal residence is fully exempt for every year it was designated as such, the tax is $0. You still report the sale (Schedule 3 and Form T2091), but you owe nothing. Only one property per family unit can be the principal residence in a given year.

The property flipping rule

If you sold a residential property (or an assignment) you owned for less than 365 days, the profit is deemed business income, fully taxable (100%, not 50%) and the principal residence exemption is denied, unless a life-event exception applies (death, disability, birth, marriage breakdown, work relocation, insolvency, etc.). This rule applies to dispositions since January 1, 2023.

Superficial loss rule

If you realize a loss and buy back the same or identical property within 30 days before or after (by you or an affiliated person), the loss is denied and instead added to the ACB of the repurchased property.

Carrying losses

Net capital losses can be carried back 3 years or forward indefinitely, but only against capital gains, never against ordinary income (except a limited rule at death).

What this doesn't model

The lifetime capital gains exemption on qualified small-business shares or farm/fishing property, recapture of depreciation (CCA) on rental buildings, the change-in-use rules, foreign-property reporting, or the alternative minimum tax. Only the basic personal amount credits are applied: age, pension and other credits and the provincial low-income tax reductions are left out. If your other income is a salary, the income tax calculator also applies the CPP/QPP, EI and Canada employment amount credits. They change the tax on a gain in two cases only: in Ontario, by up to about $130, because the surtax is worked out after those credits, and when the salary is under about $25,000, where credits it leaves unused cover part of the tax on the gain (up to about $500). Estimate your full-year tax with the income tax calculator, or model a rental sale end-to-end with the property investment calculator.