How the tax is estimated
Your capital gain is the selling price minus your adjusted cost base minus the costs of selling. If the result is negative, it is a capital loss.
Only half of a capital gain is taxable (an inclusion rate of 50%). The taxable gain is added to your other income and taxed at your federal and provincial or territorial rates for 2026.
The tax shown is the difference between your tax with the gain and without it, so a large gain can push part of it into higher brackets.
Rules to know
- Principal residence: gains on your main home are generally exempt when you designate it, so a home sale is usually not taxed. This tool does not apply that exemption.
- Capital losses: a net capital loss can be carried back three years or forward indefinitely against taxable capital gains, not against other income.
- TFSA and RRSP: gains inside a TFSA are not taxed, and gains inside an RRSP are taxed as income when withdrawn.
- Lifetime capital gains exemption: the CRA’s T4037 guide shows $1,250,000 for qualified small business shares and farm or fishing property, shown there as a proposed change. Confirm the amount before relying on it.
- Inclusion rate: the 50% rate is what the CRA states in the T4037 guide. A proposal to raise it to two-thirds on gains above $250,000 was cancelled in March 2025, as reported in the news; we did not find that confirmation on an official CRA page.
What this leaves out
- The principal residence exemption and the lifetime capital gains exemption.
- Other capital gains and losses in the same year, and prior-year net capital losses.
- Foreign exchange on foreign-currency assets, superficial loss rules and capital cost allowance recapture on rental property.
- The Alternative Minimum Tax and income-tested benefit clawbacks.
- Reserves when proceeds are paid over several years.
Frequently asked questions
What portion of a capital gain is taxable in Canada?
One half. The taxable amount is added to your income and taxed at your marginal rates. The CRA’s T4037 guide gives the one-half inclusion rate.
What is the adjusted cost base?
It is generally what you paid, plus costs such as commissions and legal fees on the purchase and capital improvements. Enter the total.
Do I pay tax when I sell my house?
Not on your principal residence if you designate it for all the years you owned it. Other property, such as a cottage or rental, is taxable on the gain.
Can I use a capital loss?
A net capital loss reduces taxable capital gains in the three previous years or any future year. It cannot be deducted from other income.
Why is the tax rate on my gain different from my marginal rate?
Only half is taxable, so the share of the gain you pay is about half your marginal rate. A large gain can also push you into higher brackets.
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How we check
The tax is the difference between two runs of the income tax engine, which is compared with the CRA’s 2026 T4032 constants. The tests check the gain arithmetic, the 50% inclusion, a hand-calculated Alberta case ($5,000 taxable × 30.5% = $1,525) and an Ontario top-bracket case (26.77% of the gain).
Limits: we did not compare results with the CRA’s or tax software. The 50% inclusion rate is from the CRA guide for 2025; a 2026 guide was not available when we checked, and the lifetime exemption amount is shown there as proposed.