How much tax do I pay on capital gains in Canada?
In Canada, only 50% of a capital gain is included in your taxable income (the inclusion rate). That taxable half is then taxed at your marginal rate. So if you are in a 43% marginal bracket, your effective tax on the gain is about 21.5%. Losses can offset gains.
What is the adjusted cost base?
The adjusted cost base (ACB) is your total cost of acquiring an asset, including the purchase price plus commissions and certain adjustments. Your capital gain is the proceeds of disposition minus the ACB minus selling costs.
Are capital losses deductible in Canada?
Yes. Allowable capital losses can be used to offset taxable capital gains in the current year. Unused losses can be carried back three years or carried forward indefinitely against future capital gains.
Is my principal residence exempt?
A gain on the sale of your principal residence is generally exempt under the principal residence exemption, provided you designate it correctly. Investment properties, second homes, and securities do not qualify for this exemption.