How much tax will I pay on a capital gain?
Half of a capital gain is added to your income and taxed at your marginal rate. The gain is the sale price (or fair market value, at death) minus your adjusted cost base (what you paid plus capital improvements) and selling costs. A principal residence can be exempt.
Values and rates shown are examples. Use your own figures. A large gain can push income into higher brackets and can trigger alternative minimum tax.
Common questions
What happens at death?
Capital property is treated as sold at fair market value at death, unless it passes to a spouse or spousal trust. The tax is due on the final return, which is why families sometimes have to sell the cottage to pay it.
Can the cottage and the house both be exempt?
Only one property per family unit can be designated as the principal residence for a given year.
Are there ways to plan for it?
Yes. Spousal rollovers, timing, and life insurance to fund the tax are common pieces. Your accountant and lawyer are part of that conversation.
The cottage conversation.
Families who keep the cottage usually decided years earlier where the money for the tax would come from.
More tools
How much TFSA room do I have?
Open →FamiliesHow much can I put in my FHSA this year?
Open →InsuranceWhat would life insurance cost me?
Open →Figures as at November 2026. Sources: Canada Revenue Agency, Service Canada, Income Tax Act.
Illustrative arithmetic only. Figures set by legislation can change; verify current rules before relying on any result. Educational only. Not tax, legal, or investment advice. Confirm with your accountant before acting. Mutual Funds and Segregated Funds provided by the Fund Companies are offered through Worldsource Wealth Management Inc., sponsoring mutual fund dealer. Other Products and Services are offered through David Creighton, Lindsay Smith, John Creighton, Matthew Smith, Darroll Powe, and Creighton Financial Group.