Capital Gains Tax Calculator Canada: A Property Sale in 2026

It subtracts the adjusted cost base (purchase price, purchase legal and registration costs, capital improvements) and the selling costs from the sale price to find the gain, removes the share sheltered by the principal residence exemption, takes half of the rest as the taxable capital gain, and works out how much federal and Alberta tax that half adds on top of your other income in 2026.

One-half. Half of a net capital gain is added to taxable income and taxed at your marginal rate. The federal government proposed raising it to two-thirds for gains above $250,000, deferred the change and cancelled it in March 2025, so the one-half rate applies to every gain in 2026.

The exempt share of the gain is one plus the number of years you designate the property as your principal residence, divided by the number of years you owned it, capped at the whole gain. Only one property per family unit can be designated for any year. The sale must be reported on Schedule 3 and Form T2091(IND) even when it is fully exempt.

Recaptured capital cost allowance on a rental, which is taxed in full on top of the gain; the alternative minimum tax; the federal basic personal amount phase-out above $181,440; capital losses you can carry forward; and the 25% holdback a buyer must withhold from a non-resident seller without a section 116 certificate. An accountant should see any large or unusual sale.

Spending that improves or extends the property beyond its original condition: a new roof, an addition, a replaced kitchen, a rebuilt deck, a finished basement. Repairs that restore what was there and routine maintenance do not count. Keep the receipts; a cost the Canada Revenue Agency asks about and you cannot prove is a cost you did not have.