Capital Gains Tax Calculator Canada 2026 — 50% / 66.67% Inclusion

Estimate 2026 capital gains tax with the 50% inclusion rate on the first $250,000 and 66.67% above it. Applies your marginal bracket and supports the principal residence exemption.

Key Takeaways

  • Only 50% of capital gains up to $250,000/year are taxable for individuals; 66.67% above that threshold (since June 2024).
  • The Principal Residence Exemption can eliminate tax entirely on the sale of your home.
  • Capital losses offset capital gains and can be carried back 3 years or forward indefinitely.
  • Donating publicly traded securities eliminates capital gains tax completely on the donated shares.

Understanding Canadian Capital Gains Tax

When you sell an investment, property, or other capital asset in Canada for more than you paid, the profit is called a capital gain. Canada taxes capital gains at a reduced rate compared to regular income — only a portion of the gain (the "inclusion rate") is added to your taxable income.

As of June 25, 2024, the inclusion rate is 50% on the first $250,000 of capital gains per year, and 66.67% on any amount above that threshold for individuals. Corporations and trusts pay the higher 66.67% rate on all capital gains. Understanding how capital gains are taxed is essential for timing asset sales, tax-loss harvesting, and retirement planning.

How It Works

This calculator estimates the tax on your capital gains based on your province, total income, and the type of asset sold. Enter the proceeds (sale price), adjusted cost base (ACB), and any selling expenses to calculate your net capital gain.

The calculator applies the appropriate inclusion rate and adds the taxable portion to your other income to determine the marginal tax rate. It supports the Principal Residence Exemption (PRE) for qualifying homes and the Lifetime Capital Gains Exemption (LCGE) for qualifying small business shares and farm property.

Capital Gains Inclusion Rate Changes (2024)

Effective June 25, 2024, Canada changed its capital gains inclusion rate structure. For individuals, the first $250,000 of capital gains per year remains at the 50% inclusion rate. Any capital gains above $250,000 in a single year are included at 66.67%. Corporations and trusts pay the higher 66.67% rate on all capital gains from the first dollar.

This two-tier structure means that most Canadians selling a cottage, investment property, or stock portfolio will still benefit from the 50% rate. However, large one-time sales — such as selling a business or a second property with significant appreciation — may trigger the higher rate on the portion above $250,000. Strategic timing of asset sales across tax years can help stay within the lower inclusion threshold.

Tax-Loss Harvesting Strategies

Tax-loss harvesting involves selling investments at a loss to offset capital gains realized elsewhere in your portfolio. In Canada, capital losses can offset capital gains from the current year, be carried back to the three preceding years, or carried forward indefinitely.

The key rule to watch is the superficial loss rule: if you sell a security at a loss and repurchase the same or identical security within 30 days (before or after the sale), the CRA will deny the loss. To maintain your market exposure while harvesting the loss, you can purchase a similar but not identical investment — for example, selling one Canadian equity ETF and buying a different one tracking a similar index.

Key Facts

  • The capital gains inclusion rate is 50% on the first $250,000 and 66.67% above that for individuals (effective June 25, 2024).
  • Capital losses can offset capital gains. Unused losses can be carried back 3 years or carried forward indefinitely.
  • The Principal Residence Exemption (PRE) can eliminate tax on the sale of your primary home.
  • The Lifetime Capital Gains Exemption (LCGE) for qualifying small business shares is indexed to inflation and increases annually. Check the CRA for the current limit.
  • Adjusted Cost Base (ACB) includes the purchase price plus any capital improvements, minus any return of capital.
  • Selling expenses (realtor fees, legal costs) reduce your capital gain.
  • Transferring assets between spouses can be done at ACB to defer capital gains (spousal rollover).
  • Capital gains on donated publicly traded securities are completely exempt from tax.

FAQ

How are capital gains taxed in Canada?

Only a portion of your capital gain is taxable. For individuals, the first $250,000 of annual capital gains has a 50% inclusion rate, and amounts above $250,000 have a 66.67% inclusion rate. The taxable portion is added to your regular income and taxed at your marginal rate. For example, a $100,000 gain with a 50% inclusion means $50,000 is added to your income.

What is the Principal Residence Exemption?

If you sell a property that was your principal residence for every year you owned it, the entire capital gain is exempt from tax. If you designated it as your principal residence for only some of the years, a partial exemption applies using the formula: (years designated + 1) / years owned. You can only designate one property as your principal residence per year.

Can I use capital losses to reduce my taxes?

Yes. Capital losses can only be applied against capital gains (not regular income). If your losses exceed your gains in a year, you can carry the net loss back 3 years or forward indefinitely to offset gains in other years. The superficial loss rule prevents you from claiming a loss if you repurchase the same investment within 30 days.

What is the Lifetime Capital Gains Exemption (LCGE)?

The LCGE allows Canadian residents to exempt a significant amount of capital gains from the sale of qualifying small business corporation shares, or qualifying farm or fishing property. This exemption is indexed to inflation and increases annually — check the CRA for the current limit.

How do I calculate my Adjusted Cost Base (ACB)?

Your ACB is the total cost of acquiring the asset, including the purchase price, commissions, legal fees, and any capital improvements. For stocks purchased at different times, use the average cost method: total cost of all shares divided by total number of shares. Return of capital distributions reduce your ACB.

Updated April 2026. Information on this page is provided for educational purposes only. Tax rules, rates, and government programs may change — verify details with the CRA or a qualified financial advisor.