Capital Gains Tax Calculator

How Capital Gains Tax Works in Canada

When you sell an asset for more than you paid, the profit is a capital gain. In Canada, only a portion of your capital gain is added to your taxable income. This portion is called the inclusion rate.

For individuals, the first $250,000 of annual capital gains is taxed at a 50% inclusion rate. This means if you have a $100,000 gain, only $50,000 gets added to your income and taxed at your marginal rate. Gains above $250,000 in a single year are taxed at a 66.67% inclusion rate following changes that took effect June 25, 2024.

Your adjusted cost base (ACB) is what you paid for the asset, including purchase commissions, legal fees, and in the case of real estate, land transfer taxes and capital improvements. Selling expenses like real estate commissions, legal fees, and trading commissions are subtracted from your proceeds before calculating the gain.

Some assets qualify for special treatment. Your principal residence is generally exempt from capital gains tax. Qualified small business corporation shares and qualified farm or fishing property may be eligible for the Lifetime Capital Gains Exemption, which shelters up to $1,016,836 of gains from tax in 2025.

Capital losses can offset capital gains in the current year, be carried back three years, or carried forward indefinitely. Tracking your losses is an important part of tax planning.