Capital Gains on Rental Property Calculator Ontario

Calculate your capital gains on Ontario rental property with this easy-to-use calculator. Understand how to maximize your returns while complying with Ontario tax laws.

How to Use This Calculator

Enter the following information to calculate your capital gains:

Purchase price of the property
Sale price of the property
Total expenses (including capital improvements)
Date of purchase
Date of sale

Click "Calculate" to see your capital gains and tax implications. The calculator will show you the gross capital gain, net capital gain, and estimated tax payable.

Formula Used

The capital gain is calculated using the following formula:

Gross Capital Gain = Sale Price - Purchase Price

Net Capital Gain = Gross Capital Gain - Total Expenses

Taxable Capital Gain = Net Capital Gain - Capital Gains Exemption

Estimated Tax Payable = Taxable Capital Gain × Tax Rate

In Ontario, the capital gains exemption is $300,000 for individuals and $600,000 for couples. The tax rate for capital gains is 50.522% for individuals and 50.522% for couples.

Worked Example

Let's calculate the capital gains for a property purchased for $200,000 on January 1, 2015, and sold for $350,000 on June 30, 2020. Total expenses were $50,000.

Gross Capital Gain = $350,000 - $200,000 = $150,000

Net Capital Gain = $150,000 - $50,000 = $100,000

Taxable Capital Gain = $100,000 - $300,000 = $100,000

Estimated Tax Payable = $100,000 × 50.522% = $50,522

In this example, the seller would owe $50,522 in capital gains tax on the sale of the property.

Understanding Capital Gains on Rental Property in Ontario

What Are Capital Gains?

Capital gains are the profits made from selling an asset for more than its original purchase price. For rental properties, capital gains can be significant if the property has appreciated in value over time.

How Are Capital Gains Taxed in Ontario?

In Ontario, capital gains are taxed at a flat rate of 50.522%. However, there is a capital gains exemption that reduces the taxable amount of your capital gain. For individuals, the exemption is $300,000, and for couples, it is $600,000.

What Expenses Can Be Deductible?

Various expenses related to the rental property can be deducted from the capital gain, including:

Purchase costs
Renovations and improvements
Legal and closing costs
Property taxes
Insurance premiums
Interest on any mortgage used to purchase the property

How to Minimize Capital Gains Tax?

To minimize capital gains tax, consider the following strategies:

Hold the property for at least 12 months to qualify for the capital gains exemption
Maximize deductions by keeping detailed records of all expenses
Consider selling the property at a loss to offset gains from other investments
Use the capital gains exemption to reduce the taxable amount of your capital gain

When Are Capital Gains Reported?

Capital gains from the sale of a rental property must be reported on your tax return. The Canada Revenue Agency (CRA) requires detailed information about the property, including the purchase price, sale price, and any expenses incurred.

Frequently Asked Questions

What is the capital gains exemption in Ontario?

The capital gains exemption in Ontario is $300,000 for individuals and $600,000 for couples. This exemption reduces the taxable amount of your capital gain.

What expenses can I deduct from my capital gain?

You can deduct various expenses related to the rental property, including purchase costs, renovations, legal and closing costs, property taxes, insurance premiums, and interest on any mortgage used to purchase the property.

How are capital gains taxed in Ontario?

Capital gains are taxed at a flat rate of 50.522% in Ontario. However, the capital gains exemption reduces the taxable amount of your capital gain.

When do I need to report capital gains from a rental property?

You must report capital gains from the sale of a rental property on your tax return. The Canada Revenue Agency (CRA) requires detailed information about the property, including the purchase price, sale price, and any expenses incurred.