This calculator estimates the capital gains tax you would owe in British Columbia for the 2025 tax year. It compares the tax under the current 50% inclusion rate with the proposed 66.7% rate on gains exceeding $250,000, which is set to take effect on January 1, 2026.
What is capital gains tax?
Capital gains tax applies when you sell an investment or asset for more than its original purchase price. The profit — the difference between the sale price and the adjusted cost base — is a capital gain and is taxable in Canada. Common situations that trigger capital gains include:
- Selling stocks, ETFs, or mutual funds held outside of a TFSA or RRSP
- Selling a rental property, cottage, or vacation home in BC
- Disposing of shares in a private corporation
- Selling cryptocurrency for a profit
Capital gains can be realized (the asset is sold) or unrealized (the asset has increased in value but has not been sold). Only realized gains are taxed.
What is a capital loss?
A capital loss occurs when you sell an asset for less than its adjusted cost base. Capital losses can be used to offset capital gains in the same year, carried back three years, or carried forward indefinitely. This makes tracking losses important for tax planning. As with all tax situations, consulting a professional is recommended.
Capital gains tax rates in British Columbia
When a capital gain is included in your income, it is taxed at your combined federal and BC marginal tax rate. The table below shows the 2025 combined rates for British Columbia:
| 2025 Taxable Income | Combined Marginal Tax Rate |
|---|---|
| First $49,279 | 20.06% |
| Over $49,279 up to $57,375 | 22.70% |
| Over $57,375 up to $98,560 | 28.20% |
| Over $98,560 up to $113,158 | 31.00% |
| Over $113,158 up to $114,750 | 32.79% |
| Over $114,750 up to $137,407 | 38.29% |
| Over $137,407 up to $177,882 | 40.70% |
| Over $177,882 up to $186,306 | 44.02% |
| Over $186,306 up to $253,414 | 46.12% |
| Over $253,414 up to $259,829 | 49.80% |
| Over $259,829 | 53.50% |
For a detailed look at how these rates apply to your employment income, see the BC tax brackets guide.
New capital gains tax rules in Canada
The 2024 federal budget introduced significant changes to capital gains taxation in Canada. Here is the current status:
What changed on June 25, 2024
- The capital gains inclusion rate increased from 50% to 66.7% on gains above $250,000 for individuals in a single year
- For capital gains under $250,000, the inclusion rate remains at 50% for individuals
- For corporations and trusts, the inclusion rate increased to 66.7% on all capital gains
Deferral to January 1, 2026
The increased inclusion rate was originally announced for June 25, 2024 but has since been deferred to January 1, 2026. This means that for the 2025 tax year, the inclusion rate for individuals remains at 50% on all capital gains regardless of the amount. The new two-tier system will apply starting in the 2026 tax year.
Capital gains inclusion rates
| Category | Up to $250,000 | Over $250,000 |
|---|---|---|
| Individuals (2025) | 50% | 50% |
| Individuals (2026+) | 50% | 66.7% |
| Corporations & trusts (2026+) | 66.7% | 66.7% |
This deferral gives BC residents additional time to plan for the impact of the higher inclusion rate. If you are considering selling property or investments with large capital gains, the timing of the sale relative to January 1, 2026 could significantly affect your tax bill.
British Columbia capital gains tax on property
In British Columbia, capital gains tax applies to the sale of property that is not your principal residence. This includes:
- Rental properties — The full capital gain (sale price minus adjusted cost base minus expenses) is taxable
- Vacation homes and cottages — Capital gains apply even if you use the property personally
- Land held for investment — Including undeveloped lots
- Commercial and industrial property — Full capital gains apply
The tax is calculated by including the gain in your income (at the applicable inclusion rate) and applying your combined BC and federal marginal tax rate. On a $200,000 capital gain in 2025, with a 50% inclusion rate, $100,000 would be added to your income and taxed at your marginal rate.
BC speculation and vacancy tax
BC also levies a Speculation and Vacancy Tax on residential property in designated areas that is left empty or underutilized. This is separate from capital gains tax and applies annually.
Principal residence exemption
If you are selling your primary home in British Columbia, the principal residence exemption allows you to avoid paying capital gains tax entirely. You must have ordinarily inhabited the property during the years you are claiming the exemption, and you must designate it as your principal residence when filing.
How to calculate capital gains tax in BC
Step 1: Calculate the capital gain
- Sale price minus adjusted cost base (ACB) minus selling expenses = capital gain
Step 2: Apply the inclusion rate
- 2025: 50% of the gain for individuals
- 2026+: 50% on first $250,000, 66.7% on the remainder
Step 3: Add the taxable capital gain to your income
Step 4: Apply your combined BC and federal marginal tax rate
Example calculation
You sell a rental property in BC for $800,000. Your ACB was $500,000 and selling costs were $30,000.
- Capital gain = $800,000 - $500,000 - $30,000 = $270,000
- 2025 taxable gain (50%) = $135,000
- This $135,000 is added to your other income and taxed at your marginal rate
If you made the same sale in 2026 under the new rules:
- 50% on first $250,000 = $125,000
- 66.7% on remaining $20,000 = $13,340
- Total taxable gain = $138,340 (an increase of $3,340 in taxable income)
The BC land transfer tax calculator is also relevant if you are purchasing property to replace the one you sold.
Tax-efficient strategies for BC investors
- Maximize TFSA contributions: All capital gains inside a TFSA are completely tax-free
- Use RRSP for income-producing investments: Defer tax until retirement when your marginal rate may be lower
- Harvest capital losses: Sell losing investments to offset gains in the same or prior years
- Time large dispositions: Consider spreading large gains across tax years, especially around the 2026 inclusion rate change
- Principal residence planning: Ensure your primary home qualifies for the full exemption
Frequently asked questions
How is capital gains tax calculated in BC?
Capital gains are taxed by including a portion of the gain as income. In 2025, the inclusion rate is 50%. The included amount is then taxed at your combined federal and BC marginal rate.
What is the capital gains inclusion rate in 2025?
For individuals in 2025, the inclusion rate is 50% on all capital gains. The new 66.7% rate on gains above $250,000 has been deferred to January 1, 2026.
Do I pay capital gains tax on my primary residence in BC?
No. The principal residence exemption eliminates capital gains tax on the sale of your primary home, provided you designate it as such.
Can I offset capital gains with losses?
Yes. Realized capital losses can offset capital gains in the current year, be carried back three years, or carried forward indefinitely.
What is the top capital gains tax rate in BC?
At the top marginal rate of 53.50% with a 50% inclusion rate, the effective capital gains tax rate is 26.75%. Under the 66.7% inclusion rate (2026+), this would increase to approximately 35.69%.
Related guides
- BC tax brackets
- BC land transfer tax calculator
- Canada capital gains tax calculator
- BC mortgage payment calculator
- TFSA contribution limit
- RRSP contribution limit
