Capital Gains Tax on a Property Sale in Canada: Vancouver Examples for 2026
Ten years ago the typical Greater Vancouver apartment cost about $499,000. Today the benchmark is $682,500. If that condo was your rental rather than your home, the $183,500 difference is the starting point for a tax bill, and on $100,000 of other income my worked example below lands at roughly $24,000 on the gain alone, or $36,700 if you claimed depreciation.
That number surprises owners in both directions. Some expect to lose half the gain to tax; they won't, because only half of a capital gain is taxable in Canada. Others forget the depreciation they claimed on the building, which comes back as fully taxable income in the year of sale. Below are the rules as they stand on October 17, 2026, and three worked examples built on Greater Vancouver Realtors (GVR) benchmark prices, so you can see where the money actually goes.
Source: Income Tax Act s. 38; s. 13(1); CRA 2026 federal brackets; B.C. 2026 brackets. Estimate: combined bracket rates on the extra income only, no credits, AMT or benefit clawbacks.
Half the gain is taxable, and that's still the law
Section 38 of the Income Tax Act says your taxable capital gain is one half of your capital gain. That taxable half gets added to your other income for the year and taxed at your normal federal and B.C. rates. There is no separate "capital gains tax rate" in Canada; it's income tax on half the profit.
You may remember the plan to raise the inclusion rate to two-thirds. On March 21, 2025, the Prime Minister announced it was cancelled. I checked the Act as published on Justice Laws (current to September 30, 2026) and it still reads one half, and CRA's 2025 capital gains guide (T4037) uses the same 50% in its examples. I found no new change announced as of today. For 2026 sales, plan on 50%.
Because only half is taxed, the most you'll pay in B.C. is half the top combined rate: 26.75% of the gain, and only on the slice of income above $265,545. Most sellers pay less than that on most of the gain.
| Gain | Taxable | Extra tax | % of gain |
|---|---|---|---|
| $50,000 | $25,000 | $8,335 | 16.7% |
| $100,000 | $50,000 | $18,138 | 18.1% |
| $250,000 | $125,000 | $50,696 | 20.3% |
Source: Income Tax Act s. 38(a); CRA 2026 federal brackets; B.C. 2026 brackets. Estimate: combined bracket rates on the extra income only, no credits, AMT or benefit clawbacks.
What counts as the gain: ACB, improvements, selling costs
The formula sits in section 40(1) of the Act: sale price, minus your adjusted cost base (ACB), minus the costs of selling. Each piece is worth real money, so get them right.
Adjusted cost base. CRA's T4037 guide defines it as the cost of the property plus the expenses to acquire it, such as commissions and legal fees, plus the cost of additions and improvements. For a rental, CRA's rental income guide (T4036) adds a detail most people miss: you can't deduct the land transfer tax you paid when you bought, but you add it to the property's cost. In B.C. that's the property transfer tax, which on a $499,000 purchase is $7,980 (my PTT guide has the full rate table).
Improvements, not repairs. A new kitchen, an added bathroom or a full flooring replacement raises your ACB. Fixing a leaking tap or repainting between tenants doesn't; CRA says current expenses such as maintenance and repairs can't be added to the cost base. On a rental you usually deduct those repairs against rent in the year you pay them, so you've already had that benefit.
Selling costs. T4037 calls them outlays and expenses: commissions, legal fees, surveyors' fees, advertising, fixing-up expenses. They come off the sale price. The closing costs guide covers what's typical on the buy side; keep the statements from both ends of the deal.
One more rule for anything with a building on it: CRA asks you to split the selling price between land and building and report them separately. That split matters for the next section.
Worked example: a rental condo held 10 years
This is a hypothetical, built on real benchmarks. Say you bought a Greater Vancouver apartment as a rental in September 2016 for $499,000. That's roughly what the GVR apartment benchmark was then: today's $682,500 is 36.8% higher than ten years ago. You paid $1,500 in legal fees on the purchase, spent $25,000 on a new kitchen and flooring along the way, and you sell this fall at the benchmark price with $20,000 in commission, GST on the commission and legal fees.
| Line | Amount | Note |
|---|---|---|
| Sale price | $682,500 | GVR apartment benchmark, Sept 2026 |
| Minus selling costs | −$20,000 | assumed: commission, GST, legal |
| Purchase price (2016) | $499,000 | about the 2016 benchmark |
| + Property transfer tax paid | $7,980 | 1% of first $200K + 2% of the rest |
| + Legal fees on purchase | $1,500 | assumed |
| + Improvements | $25,000 | assumed: kitchen, flooring |
| = Adjusted cost base | $533,480 | |
| Capital gain | $129,020 | sale − selling costs − ACB |
| Taxable capital gain (50%) | $64,510 | added to your income |
Source: Greater Vancouver Realtors, September 2026 stats package (MLS® HPI, Greater Vancouver); CRA T4037; CRA T4036; B.C. PTT rates. Fees, improvements and selling costs are assumptions.
So the $183,500 paper gain becomes a $129,020 capital gain once purchase costs, improvements and selling costs come off, and $64,510 of it is taxable. Every receipt you can document moves that number down. Lose the $25,000 of renovation invoices and you've added $12,500 to your taxable income.
The part people forget: CCA recapture
If you claimed capital cost allowance (CCA, tax depreciation) on the building while you rented it out, the sale is when CRA takes it back. Most rental buildings are Class 1 at 4% a year, the land is never depreciable, and the regulations only let you claim CCA up to your net rental income, so it can't create a rental loss.
When you sell, the building's share of the price reduces its class by the lesser of that share and what the building originally cost (section 13). If that leaves a negative balance, the negative amount is recapture and it goes into income at 100%, not 50%. Only the price above the building's original cost is a capital gain.
Back to the hypothetical condo. Say $300,000 of the original cost was allocated to the building and you claimed $30,000 of CCA over the years. The building's share of today's price is above $300,000, so all $30,000 comes back as income. The capital gain doesn't change: CCA lowers the building's tax balance, not your ACB. Your income for the year goes up by $64,510 plus $30,000, which is $94,510.
Source: CRA 2026 federal brackets; B.C. 2026 brackets. Estimate: combined bracket rates on the extra income only, no credits, AMT or benefit clawbacks
Show the numbers
| Item | Extra tax |
|---|---|
| $60,000 other income | $31K |
| $100,000 other income | $37K |
| $150,000 other income | $41K |
| $250,000 other income | $50K |
| Income | No CCA | With CCA | Extra |
|---|---|---|---|
| $60,000 | $19,400 | $31,300 | $11,900 |
| $100,000 | $24,000 | $36,700 | $12,700 |
| $150,000 | $27,800 | $41,500 | $13,700 |
| $250,000 | $33,600 | $49,600 | $16,000 |
Income = your other taxable income that year. Rounded to $100. "No CCA" means you never claimed depreciation, so only the taxable gain is added to income; "With CCA" adds the $30,000 of recapture.
Source: CRA 2026 federal brackets; B.C. 2026 brackets. Estimate: combined bracket rates on the extra income only, no credits, AMT or benefit clawbacks; Income Tax Act s. 13(1).
Read the last column carefully. Recapture isn't a penalty; it's the reversal of deductions you already took against rent, often at a similar marginal rate. The trap is timing: those deductions were spread over a decade, and the recapture all lands in one year, on top of the gain. At $100,000 of other income, the $30,000 of recapture costs about $12,700. If you're deciding whether to claim CCA on a rental you plan to sell in a few years, run this table first. The answer isn't always yes.
Townhouse gains, detached losses
Ten-year results in Greater Vancouver have been very different by property type. GVR's benchmark for townhouses is up 49.5% over ten years and apartments 36.8%, but detached homes only 4.5%. Over five years detached is down 2.0%. Your capital gain depends heavily on what you bought and when.
- Up
- Down
Source: Greater Vancouver Realtors, September 2026 stats package (MLS® HPI, Greater Vancouver). The benchmark is a typical home, not any one property
Show the numbers
| Item | Change |
|---|---|
| Townhouse, 10 years | +49.5% |
| Apartment, 10 years | +36.8% |
| Detached, 10 years | +4.5% |
| Townhouse, 5 years | +6.0% |
| Apartment, 5 years | +0.3% |
| Detached, 5 years | −2.0% |
Second hypothetical: a townhouse bought as a rental in September 2016 for $680,000, about where the townhouse benchmark sat then, and sold now at the $1,016,700 benchmark. Assume $1,500 in purchase legal fees, $40,000 of renovations, $30,000 in selling costs and no CCA claimed.
| Line | Amount |
|---|---|
| Sale price (Sept 2026 benchmark) | $1,016,700 |
| Minus selling costs (assumed) | −$30,000 |
| ACB: price + PTT $11,600 + legal + renovations | $733,100 |
| Capital gain | $253,600 |
| Taxable (50%) | $126,800 |
| Extra tax, $60,000 other income | $44,600 |
| Extra tax, $100,000 other income | $51,500 |
| Extra tax, $150,000 other income | $57,400 |
Source: Greater Vancouver Realtors, September 2026 stats package (MLS® HPI, Greater Vancouver); CRA 2026 federal brackets; B.C. 2026 brackets. Estimate: combined bracket rates on the extra income only, no credits, AMT or benefit clawbacks. Fees, renovations and selling costs are assumptions.
On a $253,600 gain, the seller with $100,000 of other income keeps about $202,100 after tax. That's 20% of the gain going to tax, well under the "half" people fear.
Now the third case. Someone who bought a rental house five years ago at the detached benchmark and sells at today's benchmark has a loss on paper, before selling costs make it bigger. A loss on a rental is a capital loss: half of it is an allowable capital loss, and it can only be used against taxable capital gains. Under section 111(1)(b) unused net capital losses can be carried back three years or forward with no time limit. That's different from your own home: CRA treats a principal residence as personal-use property, so a loss on it can't be claimed at all.
Your own home: usually zero
If the property was solely your principal residence for every year you owned it, there's no tax on the gain. You still have to report the sale on Schedule 3 and Form T2091. I've covered the formula, the one-home-per-family rule and what happens when part of the house is rented in my principal residence exemption guide, so I'll keep this short.
Where the two worlds meet: when a home becomes a rental, or a rental becomes your home, CRA treats it as a sale and repurchase at market value on the date of the change, unless you file one of the elections described in that guide. If you've moved out of a Vancouver condo and kept it as a rental, the market value on the day you moved out is the number your future capital gain will be measured from. Get a written evaluation dated close to that day and file it with your tax records. Our home value estimator is a starting point; a REALTOR® opinion or appraisal is better evidence.
Sold within two years: two flipping regimes
Short holds change everything above. Two separate rules can apply, and they stack.
Federal residential property flipping rule. If you sell a housing unit in Canada (including a rental, or a presale contract) that you owned for less than 365 consecutive days, the profit is deemed business income. That means 100% of it is taxable, not 50%, and the principal residence exemption doesn't apply. A loss is deemed to be nil. There are exceptions for life events such as a death, a new household member, a relationship breakdown, serious illness, an eligible job relocation and involuntary job loss.
BC home flipping tax. Separately, B.C. charges a flipping tax on the profit from selling B.C. residential property, including presale contracts, owned for less than 730 days. The rate is 20% within 365 days and falls gradually to zero at day 730. It's its own return, not part of your income tax, and there's a deduction of up to $20,000 for a home you lived in as your primary residence and owned at least 365 consecutive days. The BC flipping tax post walks through the sliding rate.
| Owned | Federal | BC flipping tax |
|---|---|---|
| Under 365 days | 100% taxable, no PRE | 20% |
| 365 to 729 days | 50% taxable or PRE | Under 20%, falling |
| 730+ days | 50% taxable or PRE | None |
Source: CRA: residential property flipping rule; Government of B.C.: BC home flipping tax. Exemptions and exceptions apply under both regimes.
My read: if you're anywhere near day 365 or day 730, the closing date is a tax decision. Moving completion a few weeks later can change how the profit is taxed under both rules. Talk to your accountant before you sign, not after.
Inherited property and non-resident sellers
Inherited property. When someone dies, section 70(5) treats their capital property as sold at fair market value immediately before death. Any tax on a rental or second property is owed on the deceased's final return, not by the heir. The heir starts with a cost equal to that market value, so if you inherit a condo and sell it soon after, your own gain is usually small. Property left to a spouse or common-law partner can roll over without that deemed sale under section 70(6). The estate's executor and accountant handle this, but heirs should keep the date-of-death valuation; it's your ACB.
Non-residents. A seller who isn't a Canadian resident for tax purposes generally has to notify CRA under section 116 (for most property, within 10 days after the sale), and the buyer is on the hook for 25% of the price (50% for some property, such as depreciable rental buildings) unless CRA issues a clearance certificate. In practice the buyer's lawyer holds back funds until the certificate arrives. It's a big enough topic that I'll cover it in its own post.
How to keep the bill down, legally
None of these are loopholes. They're the parts of the calculation people leave money on.
- Keep every receipt for improvements from the day you buy. Ten years later, nobody remembers what the 2019 bathroom cost, and CRA will want proof.
- Add the PTT and purchase legal fees to your ACB. On the hypothetical condo, that's $9,480 off the gain.
- Deduct every selling cost: commission, the GST on it, legal fees, staging and advertising.
- Think about the year you sell. The gain stacks on your other income for that calendar year. Look at the condo table: the same sale costs about $31,300 at $60,000 of other income and $49,600 at $250,000. A sale that completes in early January lands in the next tax year, and a year with lower income (a sabbatical, early retirement, parental leave) costs less.
- Use capital losses you already have. Old losses carried forward can offset the gain.
- Decide on CCA with the exit in mind. Claiming it helps now and costs later.
- Watch day 365 and day 730 on anything you've owned less than two years.
If you're weighing whether to sell a rental at all, the numbers matter more than the tax. Our capital gains calculator runs your own figures, and the investor guide covers holding costs. I can tell you what the property would likely sell for today, which is the one number in this whole calculation you can't find in your own files.
This is general information, not tax advice. Confirm your own situation with an accountant (or a lawyer for estates and non-resident sales) before you list.
FAQ
What is the capital gains inclusion rate in Canada for 2026?
One half. Section 38 of the Income Tax Act still taxes 50% of a capital gain, and the proposed increase to two-thirds was cancelled on March 21, 2025.
How much tax will I pay on the sale of a rental property in B.C.?
Half the gain is added to your income and taxed at your combined federal and B.C. rate, plus any CCA recapture at 100%. In the hypothetical condo example, a $129,020 gain plus $30,000 of recapture adds about $36,700 of tax for someone with $100,000 of other income.
Can I add the property transfer tax to the cost base?
Yes. CRA says you can't deduct the land transfer tax you paid on purchase as a rental expense; you add it to the property's cost, which lowers the capital gain when you sell.
Do I pay capital gains tax when I sell my own home in B.C.?
Usually not, if it was solely your principal residence for every year you owned it. You still report the sale on Schedule 3 and Form T2091. Sales within 365 days fall under the federal flipping rule, and sales within 730 days can trigger the BC home flipping tax.
Sources
- Income Tax Act s. 38: taxable capital gain is one half (Justice Laws, current to Sept 30, 2026)
- Income Tax Act s. 40: how a gain is calculated
- Income Tax Act s. 13: recapture of capital cost allowance
- Income Tax Regulations s. 1100(11): CCA limit on rental property
- Income Tax Act s. 70: deemed disposition on death, spousal rollover
- Income Tax Act s. 111: carrying net capital losses
- Income Tax Act s. 116: dispositions by non-residents
- Income Tax Act s. 117: federal rate schedule
- CRA: T4037 Capital Gains 2025
- CRA: T4036 Rental Income 2025
- CRA: Tax rates and income brackets for individuals, 2026
- Government of B.C.: Personal income tax rates, 2026
- Prime Minister of Canada: proposed capital gains tax increase cancelled (Mar 21, 2025)
- CRA: Residential property flipping rule
- Government of B.C.: BC home flipping tax
- CRA: Principal residence and other real estate
- Government of B.C.: Property transfer tax
- Greater Vancouver Realtors: September 2026 stats package (MLS® HPI)
Dan Marusin PREC, REALTOR® · Renanza Realty Inc., 777 Hornby St, Suite 600, Vancouver, BC. This article is general information, not legal, tax or financial advice.