Canada
The 2026 inclusion rate on a Canadian property sale
For the 2026 tax year, Canada's capital gains inclusion rate remains 50 per cent. On a secondary property sale with a $400,000 profit, exactly $200,000 is added to taxable income. An Ontario seller earning $100,000 pays $80,744 in total tax.
| Statutory inclusion rate (2026) | 50% of net capital gains |
| Cancelled 2/3 proposal | Scrapped by the Prime Minister on 21 March 2025 |
| Tax on $200,000 gain (ON) | $37,123 |
| Tax on $400,000 gain (ON) | $80,744 |
| Tax on $800,000 gain (ON) | $173,064 |
How does the Canadian capital gains inclusion rate work?
In Canada, capital gains are not taxed under a separate flat rate. The CRA applies an inclusion rate of 50 per cent to your net profit. Exactly one-half of your capital gain is classified as a taxable capital gain. The remaining 50 per cent is completely tax-free.
Your taxable capital gain is stacked on top of your other income and taxed at your marginal federal and provincial brackets. Budget 2024 proposed raising the rate to two-thirds for gains over $250,000, but that change was officially cancelled on 21 March 2025.
How much tax on $200k, $400k, $600k and $800k gains?
Larger gains reach higher marginal brackets.
| Net capital gain | Taxable gain (50%) | Estimated tax | Effective rate |
|---|---|---|---|
| $200,000 | $100,000 | $37,123 | 18.6% |
| $400,000 | $200,000 | $80,744 | 20.2% |
| $600,000 | $300,000 | $126,904 | 21.2% |
| $800,000 | $400,000 | $173,064 | 21.6% |
2026 capital gains tax in Ontario for an owner earning $100,000.
How does your income affect the tax?
Your other income dictates which bracket your taxable gain begins in.
| Baseline income | Capital gain | Estimated tax | Effective rate |
|---|---|---|---|
| $50,000 | $400,000 | $72,114 | 18.0% |
| $100,000 | $400,000 | $80,744 | 20.2% |
Tax on a $400,000 gain in Ontario at two income levels.
How does tax vary by province?
Federal rates are uniform, but provincial brackets differ significantly.
| Province | Total tax | Effective rate |
|---|---|---|
| ON | $80,744 | 20.2% |
| BC | $87,982 | 22.0% |
| AB | $80,876 | 20.2% |
| QC | $97,496 | 24.4% |
Tax on a $400,000 gain across provinces, $100,000 income.
Work out your Canadian capital gains tax
Common questions
What is the capital gains inclusion rate in Canada for 2026?
For 2026, the inclusion rate remains 50%. Half of your net capital gain is taxable income, the other half is tax-free.
Did the proposed two-thirds rate take effect?
No. The proposal was cancelled on 21 March 2025. The rate remains 50%.
How is capital gains tax calculated on a Canadian property?
Subtract your adjusted cost base and selling expenses from proceeds. Multiply by 50% to get your taxable gain, taxed at your combined marginal brackets.
Does the inclusion rate apply to a primary residence?
No. The Principal Residence Exemption shields 100% of the gain if the home was your designated principal residence for all years owned.
How does other income impact capital gains tax?
Your taxable capital gain stacks on top of other income. Higher earnings push the gain into higher brackets, increasing the effective rate.
This is an estimate for general information only, not tax, legal or financial advice. Tax rules are complex and depend on your circumstances, and figures may not reflect the latest changes. Confirm your position with Canada Revenue Agency (canada.ca) or a qualified tax adviser before acting. The terms of use set out the limits of this estimate and of our liability.
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