Capital Gains Tax Calculator

How Capital Gains Tax Works in Canada (2026)

When you sell a capital property — such as stocks, mutual funds, ETFs, rental property, or a cottage — for more than you paid, the profit is a capital gain. Canada does not tax the full gain. Instead, only 50% of the capital gain (the “inclusion rate”) is added to your taxable income for the year. A proposed increase to 66.67% for gains above $250,000, announced in the 2024 federal budget, was formally cancelled on March 21, 2025. The inclusion rate remains 50% for all capital gains in 2026, regardless of amount.

Your principal residence is generally exempt from capital gains tax under the Principal Residence Exemption (PRE). To claim the exemption, you must designate the property on Schedule 3 and report the disposition on your return — even if no tax is owed. If you owned the property for every year since acquisition, the full gain is sheltered. Rental properties, vacation homes, and inherited properties do not automatically qualify for the PRE and may trigger a taxable gain on sale.

Effective Capital Gains Tax Rates by Income (Ontario, 2026)

You can offset capital gains with capital losses from other dispositions in the same year. Unused losses can be carried back three years or carried forward indefinitely. The Lifetime Capital Gains Exemption (LCGE) shelters up to $1,250,000 in 2026 for qualifying small business shares and farm/fishing property. Tax-loss harvesting — selling losing investments before year-end to realize losses — is a common strategy to reduce your net capital gains. Be aware of the superficial loss rule: if you repurchase the same security within 30 days, the loss is denied.