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Tax Simplified

Capital gains tax calculator

How much tax do you owe on a capital gain in Canada? Enter your income, province, and gain amount. Covers the principal residence exemption and the Lifetime Capital Gains Exemption.

Your gain

Salary, pension, interest — income other than this capital gain.

$

The gain — proceeds minus your adjusted cost base. Not the total sale price.

$
Note: For individuals, the 50% inclusion rate applies to all capital gains. The 2/3 inclusion rate proposed in Budget 2024 was not passed into law as of 2026 — the 50% rate remains.

Enter your gain amount to see the estimated tax.

How capital gains tax works in Canada

A capital gain is the profit you make when you sell a capital asset — shares, investment property, a cottage — for more than you paid for it (your adjusted cost base, or ACB). You pay tax on a portion of that gain, not all of it.

For 2026, individuals include 50% of any capital gain in their income. That taxable amount is then taxed at your marginal rate, which depends on your other income and province of residence.

What counts as your adjusted cost base?

Your ACB is what you originally paid for the asset, plus any costs to acquire it (commissions, legal fees) and any improvements (for real estate). Subtract your ACB and selling costs from the proceeds of disposition to get your capital gain.

Principal residence exemption

If the property was your principal residence for every year you owned it, the entire gain is exempt from tax. You still need to report the sale on Schedule 3 of your T1 return — CRA made this mandatory starting in 2016.

If you only lived there for some of the years, a partial exemption applies. The formula is: 1 + (number of years it was designated as principal residence) ÷ total years owned. A tax advisor can help if you have partial years.

Lifetime Capital Gains Exemption

The LCGE shields up to $1,250,000 in capital gains (in 2026) from tax on the disposition of:

  • Qualifying small business corporation (QSBC) shares
  • Qualified farm property
  • Qualified fishing property

The rules to qualify are detailed. Shares must generally come from a Canadian-controlled private corporation (CCPC) that used at least 90% of its assets in an active business in Canada at the time of sale, and at least 50% of assets over the prior 24 months. Work with a CPA to confirm eligibility before relying on the exemption.

Reporting capital gains

Report each disposition on Schedule 3 of your T1 return. The net capital gains flow to line 12700 of your T1 and increase your taxable income. Losses in the current year offset gains; net losses can be carried back 3 years or forward indefinitely against future gains.