Investor · Taxes
Capital gains tax on Canadian real estate is a federal tax, not provincial — but BC investors need to layer it with the provincial Home Flipping Tax (effective Jan 2025) for short-hold properties. Here's the verified read.
Verified · Investor · Taxes
Federal capital gains inclusion rate
Currently 50% of capital gains is taxable income at your marginal rate. (Note: a proposed increase to 66.7% above $250K was deferred. [VERIFY current rate with your accountant — federal capital gains rules change.])
Principal residence exemption
Your principal residence is generally exempt from capital gains tax. Only one principal residence per family at a time.
Investment / rental properties
Sale of investment property triggers capital gains. 50% of gain is added to your income at your marginal rate.
BC Home Flipping Tax (effective Jan 1, 2025)
Additional BC tax on residential properties sold within 2 years of acquisition. 20% if sold within 365 days; declining to 0% by day 730.
Reporting
Capital gains reported on Schedule 3 of your federal tax return.
Deferrals
Like-kind exchanges (US 1031) do NOT exist in Canada. Limited deferral options — talk to a tax accountant.
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