For sellers

Seller's guide to capital gains in BC

Understand your tax obligations before you sell. Principal residence exemption, adjusted cost base, and strategies to reduce your tax.

Capital gains inclusion rate

50%

Only 50% of capital gains are taxable in Canada, added to your income for the year of the sale.

Principal residence

Exempt

Your principal residence is generally exempt from capital gains tax. Since 2016, you must still report the sale.

What every BC seller should know

Capital gains tax rules for real estate in Canada

Principal residence exemption

Your principal residence is generally exempt from capital gains tax in Canada. You must have designated the property as your principal residence for all years you owned it. Since 2016, you must report the sale on your tax return even if the gain is fully exempt.

How capital gains tax works

A capital gain occurs when you sell your property for more than you paid (plus improvements and selling costs). In Canada, only 50% of capital gains are taxable, added to your income for the year of the sale.

Adjusted cost base

Track all eligible capital improvements (renovations, additions) to increase your adjusted cost base and reduce your taxable gain. Regular maintenance and minor repairs don't qualify — keep receipts for major work.

Business or rental use

If you've used part of your home for business or rental income, that portion may not qualify for the principal residence exemption. If you converted your home to a rental, you can elect to treat it as your principal residence for up to four additional years.

Reducing your capital gains tax

Legitimate strategies include tracking all eligible improvements to increase your cost base, timing your sale strategically, and using capital losses from other investments to offset gains. Consult a tax professional for your specific situation.

This is general information only and not tax advice. Consult a qualified tax professional for your specific situation.