How it works: Capital tax on property for sale

We will dive deeper into the amount of capital gains you require in your tax return (more below).

Therefore, it is not to say that capital gains are taxed at a 50% rate, but It is exactly 50% of capital gains that are taxable. The capital gains tax rate depends on the amount of your income. You add capital gains to your income for the year, including money you get from your work, side hustle, dividends in unregistered accounts, any sales assets, and more.

In your personal tax return, tax capital gains as part of your income. Here is the federal tax rating for 2024 that will give you an idea of ​​how much tax you may owe in the year. You also need to figure out the provincial tax rates for your province or region. Since Canada has a layered tax system, you have to do some mathematical estimates to estimate your annual income tax, break down the total tax into scaffolds, and the amount owed for each scaffold.

The first column is the tax rate, which means the percentage of income considered taxable (not including deductions of course). The second column is the income range for this tax rate. Assume you earn $60,000 per year, $55,867 is within the tax rate of 15%, and the tax rate of $4,133 is 20.5% ($60,000-$55,867). Yes, your income is taxed at a tax rate, not at a uniform tax rate. This is called a “gradual tax system”, which means that Canadians with lower incomes are taxed at lower rates, while higher incomes are gradually rising.

Read more about the scope of Canadian provincial and territorial taxes.

And, of course, to really understand how much nickel you end up owe, you need to make a tax return and receive an assessment notice.

It is worth noting that there may be other factors to calculate capital gains. Here are some articles that go deeper into these specific situations.

Can you avoid capital gains tax?

You can avoid Capital gains tax, but you can take advantage of the CRA rules to reduce the amount you may owe. Here are a few: