Capital Gains Tax Calculator 2026

Capital Gains Tax in Canada: Key Rules and Planning Tips

A capital gain arises when you sell a capital property for more than its adjusted cost base (ACB) plus any selling expenses. Capital properties include stocks, ETFs, mutual funds, real estate (other than your principal residence), cottages, and certain business assets. If you sell for less than your ACB, you have a capital loss — which can offset capital gains in the current year, the three prior years, or any future year indefinitely.

The principal residence exemption

Your primary home is generally exempt from capital gains tax. If the property was your principal residence for every year you owned it, 100% of the gain is tax-free. If you rented it out for some years, only those years designated as principal residence are sheltered — the rest of the gain is taxable at the standard 50% inclusion rate. Only one property per family unit can be designated per year, so mixed-use situations (e.g., a cottage and a primary home) require careful planning.

Sheltering gains in registered accounts

Assets held inside a TFSA grow completely tax-free — there is no capital gains tax on sales inside a TFSA, and withdrawals are always tax-free. Assets inside an RRSP are also sheltered from capital gains tax while in the account, but when you withdraw, the entire amount (including all growth) is taxed as ordinary income. This makes the RRSP a tax-deferral vehicle, while the TFSA is a true tax-elimination vehicle for investment growth.

Year-end tax-loss harvesting

Reviewing your non-registered portfolio before December 31 each year to realize losses that offset gains elsewhere is a standard tax-planning technique. Keep the superficial loss rule in mind: if you sell a security at a loss and repurchase an identical security (or a substantially identical one through a spouse or affiliated company) within 30 days before or after the sale, the loss is denied. Plan any repurchases accordingly to ensure the loss is preserved.