Provincial Tax: Understand how federal and provincial tax rates stack together with our Canadian Provincial Tax Guide.
This Ontario capital gains tax calculator estimates tax on capital gains at the 50% inclusion rate. The calculator below also shows a figure under the proposed two-thirds rate on gains above $250,000; that rate was cancelled in March 2025 and does not apply.
This calculator helps you estimate capital gains tax in Ontario on the sale of property, stocks, and investments. The two-thirds inclusion rate proposed in the 2024 federal budget was first postponed to January 1, 2026 and then cancelled on March 21, 2025.
What is capital gains tax in Ontario?
Capital gains tax is a tax paid on the increase in value of investments or assets from their original purchase price. When you sell an asset for more than its purchase price, the difference is a capital gain, and a portion of that gain is taxable. Capital gains can be:
- Realized — when the asset is sold and the gain is locked in
- Unrealized — when the value increases but the asset hasn’t been sold yet
Only realized capital gains are taxable. Unrealized gains are not taxed until the asset is sold.
What is a capital loss?
A capital loss occurs when you sell an investment or asset for less than its adjusted cost base. Realized capital losses can be used to offset capital gains and reduce your taxable income. You can carry capital losses back 3 years or forward indefinitely to offset gains in other years. As with all tax matters, consulting a professional is advisable.
Capital gains inclusion rate in Canada
The inclusion rate is the share of a capital gain that is added to your taxable income. It is 50% (1/2) for individuals, corporations and trusts, with no $250,000 threshold.
Budget 2024 proposed raising it to two-thirds on individuals’ gains above $250,000 a year, and on all gains of corporations and trusts, from June 25, 2024. The government deferred the change to January 1, 2026 and then cancelled it on March 21, 2025, so the two-thirds rate never took effect.
Capital gains example calculation in Ontario
Let’s walk through an example. Suppose you purchased an investment property for $500,000 and sold it for $750,000, with $15,000 in selling costs (real estate commissions, legal fees).
At the 50% inclusion rate:
- Capital gain: $750,000 - $500,000 - $15,000 = $235,000
- Taxable capital gain: $235,000 × 50% = $117,500
- Tax (at ~43% marginal rate): ~$50,525
Capital gains tax rates in Ontario
These tables show the combined federal and Ontario marginal tax rates by bracket. Capital gains are included in your income and taxed at these rates on the taxable portion (after applying the inclusion rate).
2025 combined rates
| 2025 Taxable Income | Marginal Tax Rate |
|---|---|
| First $52,886 | 20.05% |
| $52,886 to $57,375 | 24.15% |
| $57,375 to $93,132 | 29.65% |
| $93,132 to $105,775 | 31.48% |
| $105,775 to $109,727 | 33.89% |
| $109,727 to $114,750 | 37.91% |
| $114,750 to $150,000 | 43.41% |
| $150,000 to $177,882 | 44.97% |
| $177,882 to $220,000 | 48.29% |
| $220,000 to $253,414 | 49.85% |
| Over $253,414 | 53.53% |
For the full breakdown of Ontario tax brackets including how the rates are built from federal and provincial components, see our detailed guide.
2024 combined rates
| 2024 Taxable Income | Marginal Tax Rate |
|---|---|
| First $51,446 | 20.05% |
| $51,446 to $55,867 | 24.15% |
| $55,867 to $90,599 | 29.65% |
| $90,599 to $102,894 | 31.48% |
| $102,894 to $106,732 | 33.89% |
| $106,732 to $111,733 | 37.91% |
| $111,733 to $150,000 | 43.41% |
| $150,000 to $173,205 | 44.97% |
| $173,205 to $220,000 | 48.29% |
| $220,000 to $246,752 | 49.85% |
| Over $246,752 | 53.53% |
While the tax rates are the same in 2024 and 2025, the bracket thresholds have been indexed for inflation.
Capital gains on second properties in Canada
Your principal residence is exempt from capital gains tax under the principal residence exemption. However, if you own a second home, cottage, rental property, or investment property, it is considered a taxable asset and any capital gain upon sale will be subject to tax.
It is important to track all costs that contribute to the adjusted cost base (ACB) of a second property. This includes:
- Original purchase price
- Land transfer tax paid
- Legal fees and commissions
- Capital improvements (renovations, additions)
- Inspection and appraisal fees
A higher ACB reduces the capital gain you have to report, directly lowering your tax bill.
What is adjusted cost base (ACB)?
The adjusted cost base is the initial cost of the capital property plus any other costs associated with purchasing or improving it, such as:
- Purchase commissions and brokerage fees
- Accounting and legal fees
- Capital improvements and renovations
- Ontario land transfer tax
For stocks, the ACB also includes reinvested dividends and return of capital adjustments.
How to calculate tax on capital gains
The formula to calculate capital gains tax:
- Calculate the capital gain: Sale price - Adjusted Cost Base (ACB) - Selling expenses = Capital gain
- Apply the inclusion rate: Capital gain × Inclusion rate (50%) = Taxable capital gain
- Apply your marginal tax rate: Taxable capital gain × Marginal rate = Tax owed
Lifetime capital gains exemption
When it cancelled the inclusion rate increase, the government said it would maintain the higher Lifetime Capital Gains Exemption limit of $1,250,000 on the sale of small business shares and farming and fishing property.
Strategies to reduce capital gains tax in Ontario
- TFSA — investments held in a Tax-Free Savings Account are completely exempt from capital gains tax
- RRSP — contributions to an RRSP grow tax-deferred; capital gains within an RRSP are not taxed until withdrawal
- FHSA — the First Home Savings Account offers tax-free growth for first-time home purchases
- Capital losses — use realized losses to offset gains in the current year, carry back 3 years, or carry forward indefinitely
- Principal residence exemption — designate your primary home to exempt it from capital gains
- Timing — if possible, spread dispositions across tax years so less of the gain lands in the top brackets
How to use this capital gains tax calculator
The calculator takes three inputs:
- Your income — your total income for the tax year (determines your marginal rate)
- Fair market value — the amount you sold the asset for
- Adjusted cost base — the original cost plus improvement costs
The calculator determines your marginal tax bracket and estimates the capital gains tax at the 50% inclusion rate (its second figure, under the cancelled two-thirds proposal, does not apply).
Frequently asked questions
How is capital gains tax calculated in Ontario?
Take your capital gain (sale price minus ACB and expenses), multiply by the inclusion rate (50%), then apply your marginal tax rate. The top combined Ontario rate is 53.53%.
What is the capital gains inclusion rate in Canada?
50% on all capital gains, for individuals, corporations and trusts. The proposed two-thirds rate on gains above $250,000 was cancelled on March 21, 2025 and never took effect.
Is there capital gains tax on a primary residence?
No. Your principal residence is exempt under the principal residence exemption.
What costs can reduce capital gains tax?
Your adjusted cost base includes the purchase price plus commissions, legal fees, land transfer tax, and capital improvements — all of which reduce your taxable gain.
Related guides
- Ontario tax brackets
- Ontario land transfer tax calculator
- TFSA contribution limit guide
- RRSP contribution limit guide
- FHSA calculator
- Canada capital gains tax calculator
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