Capital gains

Capital gains and losses

You have a capital gain when you sell, or are considered to have sold, a capital property for more than its adjusted cost base plus the expenses or outlays you incurred to sell the property. Not all of your capital gain is taxable. You have to include your taxable capital gain in income.

You have a capital loss when you sell, or are considered to have sold, a non-depreciable capital property for less than its adjusted cost base plus the expenses or outlays you incurred to sell the property. Not all of your capital loss is deductible. You can only deduct an allowable capital loss from a taxable capital gain.

For more information on capital gains and losses, see Chapter 7 of Guide T4003, Farming Income, and Line 127 - Capital gains.

Qualified farm property

If you have a taxable capital gain from the sale of qualified farm property, you may be able to claim a capital gains deduction.

Qualified farm property is certain property owned by you, your spouse, or common-law partner or by a family farm partnership in which you, your spouse, or common law partner holds an interest. Real property or eligible capital property is qualified farm property only if it is used to carry on a farming business in Canada by any one of the following:

• you, your spouse or common law partner, or any of your parents or children;
  
  
• the beneficiary of a personal trust, or the spouse or common law partner, parent, or child of such a beneficiary;
  
  
• a family farm corporation where any of the above persons owns a share of the corporation; or
  
  
• a family farm partnership where any of the above persons (except a family farm corporation) owns an interest in the partnership.

For more information on qualified farm property, real property and eligible capital property, see Chapter 7 of Guide T4003, Farming Income.

Transfer of farm Property

You may be able to postpone paying tax on any taxable capital gain and any recapture of capital cost allowance when you transfer your Canadian farm property to your child, spouse, or common-law partner.

For more information on transfers of farm property, see Chapter 7 of Guide T4003, Farming Income.

Forms and publications

• Guide T4037, Capital Gains
• Guide T4003, Farming Income

Related topics

• Line 127 - Capital Gains
• Capital Losses
• Capital gains