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Ontario has no capital gains tax of its own. Half of your gain joins your income, and the normal federal and provincial rates hit it. Sell a property for a $95,000 gain while earning $90,000 in wages, and the extra tax comes to about $17,451, or 18.4% of the gain.
How does Ontario tax a capital gain?
Start with the gain itself. The CRA’s formula: sale price, less what you paid (the adjusted cost base), less the costs of selling. Half of that gain is your taxable capital gain, and it goes on line 12700 of your return.
That half lands on top of whatever else you earned. The total then runs through the same brackets as wages. That’s why the result depends so much on what else you earned that year. The same gain costs a lot more on top of a big salary than on top of a small one.
One caution on the half. The CRA shows one-half for 2025. The government said in March 2025 that it was cancelling the planned rise to two-thirds, but we couldn’t find the 2026 rate spelled out on a CRA page. Check it before you sell late in the year. Our calculators use one-half.
Which tax rates apply to the taxable part?
These are the 2026 brackets on the CRA’s rates page. Each rate bites only on the part of your income that falls inside its band.
| Band of taxable income | Federal rate | Ontario rate |
|---|---|---|
| First slice | 14% to $58,523 | 5.05% to $53,891 |
| Second slice | 20.5% to $117,045 | 9.15% to $107,785 |
| Third slice | 26% to $181,440 | 11.16% to $150,000 |
| Fourth slice | 29% to $258,482 | 12.16% to $220,000 |
| Top slice | 33% above | 13.16% above |
Ontario also adds its surtax plus a yearly health premium. Our engine models both, so the figures below include them.
What does a $95,000 gain cost at different incomes?
Say you sold a rental for $250,000, paid $150,000 for it and spent $5,000 on selling costs. The gain is $95,000 and $47,500 of it is taxable. Below is the extra tax at three levels of other income, from our capital gains estimator.
| Other income that year | Extra tax | Share of the gain | You keep |
|---|---|---|---|
| $50,000 | $13,478.50 | 14.2% | $81,521.50 |
| $90,000 | $17,450.83 | 18.4% | $77,549.17 |
| $150,000 | $21,835.01 | 23.0% | $73,164.99 |
A smaller gain behaves differently. A $20,000 gain on top of $90,000 costs $2,990.79, or 15.0%. The first dollars of any gain fill cheap bracket space, and only the later ones reach the expensive bands, so a bigger gain drags its own average rate upward.
So timing matters.
If you can choose the year, pick one with less other income. Retirement is the classic case, and a year off work also works, provided the sale itself doesn’t drag you into the upper brackets.
Is the sale of your home taxed?
Usually not. Most Ontario homeowners can relax here. If the house was your principal residence in each year you held it, the gain is exempt. But the CRA wants the sale listed on Schedule 3, with the home named on form T2091(IND). Skip that and the exemption isn’t on file.
Two catches. If part of the house was rented out or used for a business, the sale price and cost get split, and the gain on the income-earning part is taxable. And a loss on your home is not allowed at all, because it’s personal-use property.
Mistakes that make the bill bigger
The first is forgetting the selling costs. Commissions and legal fees reduce the gain. The second is using the purchase price as the cost when your true cost base may be higher. Read the CRA’s definition of that term before you file, since we haven’t listed what qualifies here.
A third mistake is assuming a loss is wasted. A net capital loss can go back three tax years or forward with no end date. It only cancels other gains. Wages are out of reach.
The tool also leaves things out. The lifetime exemption for qualified small business and farm property is an option you switch on, and a loss is shown as no tax rather than a credit. If you want to shrink the taxable amount, an RRSP deduction is one lever, and our RRSP calculator shows how contributions grow. The marginal rate tool shows how far the gain lifts your top rate, and the full-year income tax estimate puts wages and the gain side by side.
Where do these numbers come from?
The brackets are the 2026 figures on the Canada Revenue Agency’s rates page. The half inclusion, the gain formula, the loss rules and the home-sale reporting come from the CRA’s pages on line 12700 and on calculating and reporting capital gains. We checked them on 30 September 2026. This website is independent of the CRA and every government body.
Frequently asked questions
Is there a separate Ontario tax on capital gains?
No. Half of the gain joins your income and the usual federal and Ontario rates apply.
What fraction of a gain is taxable?
One-half on the 2025 return, per the CRA. We couldn't confirm the 2026 rule on a CRA page, so look before you sell.
Will I owe tax on selling my house?
Not when it was your principal residence throughout your ownership. Report the sale on Schedule 3 and file form T2091(IND).
Can a capital loss reduce my salary tax?
No. A net loss only cancels gains, either in the three years before or in later years.
How do I calculate the gain?
Sale price minus the adjusted cost base and the costs of selling.
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Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.