Capital Gains Tax in Canada

Capital Gains Tax in Canada: The Rules Without the Fog

Canada doesn't have a separate capital gains tax. It has a rule that adds half of your gain to your income, and then your ordinary tax rates do the rest. That's why the same $100,000 gain costs a retiree much less than a surgeon: same gain, different marginal rate.

Try your own numbers in the free capital gains tax calculator.

How the Gain Is Calculated

Proceeds of disposition (the sale price) minus adjusted cost base (what you paid, plus purchase costs and capital improvements) minus outlays and expenses (commission, legal fees) equals the capital gain or loss. Half of a gain is your taxable capital gain, reported on line 12700 through Schedule 3.

Example: you bought shares for $20,000 and sold them for $50,000 with $100 of fees. The gain is $29,900 and the taxable part is $14,950. At a 30% marginal rate, that's roughly $4,485 of tax.

What Triggers a Capital Gain

• Selling shares, ETFs, mutual funds or crypto. (Swapping one crypto for another counts as a sale too.)
• Selling a cottage, land, a rental or other real estate. See the Canadian real estate tax guide.
• Giving property away, or moving it into a corporation, at fair market value.
• Changing how you use a property, such as turning your home into a rental.
• Dying. Your final return reports everything as if sold at fair market value, unless it passes to a spouse.
• Leaving Canada. Emigrants are treated as selling most of their property on the way out.

Gains That Are Exempt or Reduced

Your principal residence. Usually fully exempt, as long as it was your family's designated home for each year (plus one). It must still be reported. Our guide to the principal residence exemption for a home and cottage explains the plus-one rule and how to split years, and selling your home and taxes covers the reporting and the flipping rule. Selling or passing on a cottage is covered on cottage capital gains, and inherited property on inheriting a house.

The lifetime capital gains exemption. Shelters gains on qualified small business corporation shares and qualified farm or fishing property: $1,275,000 for 2026. The conditions are strict; this is CPA territory.

Donating securities. Giving publicly traded shares directly to a registered charity generally means the gain isn't taxed at all, and you still get the donation receipt. Usually far better than selling first and donating the cash.

Registered accounts. Gains inside a TFSA are never taxed; inside an RRSP or RRIF they're taxed only when you withdraw, as regular income.

Capital Losses

A capital loss can only reduce capital gains, not your salary. If you have more losses than gains in a year, the net loss can be carried back up to three years (with form T1A) or forward indefinitely. Losses on personal-use property such as a car, a boat or a cottage you didn't rent out are not deductible at all.

The superficial loss rule. Sell at a loss and buy the same thing back within 30 days before or after, yourself or through your spouse or a company you control, and the loss is denied for now. It's added to the cost of the new shares instead. Tax-loss selling in December is fine; selling on December 20 and buying back on January 2 is not. More on capital losses and adjusted cost base.

Rental Property and Depreciation

When you sell a rental, the depreciation (CCA) you claimed comes back as fully taxable recapture before the capital gain is even counted. That's a separate calculation with its own traps: see our guide to capital gains tax on rental property and the rental property sale calculator.

Getting Paid Over Time

If the buyer pays you over several years (a vendor take-back mortgage, for example), a capital gains reserve on form T2017 can spread the gain over up to five years. Our list of Canadian tax forms covers it.

Six Rules of Thumb

1. Keep every purchase record and improvement receipt. Your cost base is what saves you tax, and you have to prove it.
2. Report every sale, including your home.
3. Time large sales across two tax years when you can; two smaller gains often cost less than one big one.
4. Use your losses: sell losers in the same year as winners.
5. Mind the 30-day superficial loss window.
6. Donate appreciated shares instead of cash.

Crypto follows the same capital gains rules, with a few twists; see crypto taxes. How every kind of investment income is taxed is on investment taxes in Canada.

Selling shares? The cost-averaging rules, U.S. stocks and the superficial loss rule are on stock investment taxes.

Capital Gains Questions

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Sources: CRA, Guide T4037 Capital Gains; Line 12700 Taxable capital gains; 2026 indexation table (lifetime capital gains exemption). Checked October 2026. The example tax figures assume the marginal rates stated.

Last reviewed October 5, 2026 against CRA and Government of Canada sources. How we check our facts.