What are capital gains and losses?

A capital gain happens when you sell a capital property for more than what you paid for it. A capital loss happens when you sell it for less than what you paid.

If you’re holding on to something of lasting value or use, it’s likely a capital property. The CRA says some common types of capital property include:

• Cottages
• Securities, such as stocks, bonds, units of a mutual fund trust, crypto assets
• Land, buildings, and equipment used in a business or a rental operation
• Not the inventory of a business

Is a capital gain taxable?

Only part of a capital gain is subject to tax. That portion is a taxable capital gain. It gets added to your other sources of income on your tax return.

Since 2001, only 1/2 of capital gains have been taxed. This fraction is called the inclusion rate.

For more info, see Inclusion rate.

Is a capital loss tax deductible?

An allowable capital loss is the inclusion rate portion of a capital loss, which can be deducted, but only against taxable gains.   

When your allowable capital losses are more than your taxable capital gains for the year, you have a net capital loss. You can deduct it from any taxable capital gains of the past three years or any future year. Your net capital loss balances are listed on your CRA Notice of Assessment.