What is the deduction limit?

An eligible individual is entitled to a cumulative lifetime capital gains exemption (LCGE) on $750,000 of net gains realized on the disposition of qualified property. This exemption also applies to reserves from these properties brought into income in a tax year.

Note
The cumulative capital gains deduction for dispositions of qualified property from 1985 to March 18, 2007, was limited to $250,000 (1/2 of the LCGE of $500,000 applicable to these dispositions). The cumulative capital gains deduction limit for dispositions of qualified property after March 18, 2007, increased to $375,000 (1/2 of the LCGE of $750,000 applicable to these dispositions).

Because the capital gains inclusion rate in 2011 is 1/2, only 50% of the capital gain from a disposition of property is taxable.

In a year, you can claim any amount of the deduction you want, up to the maximum allowable amount you calculated.

Forms and publications

• Form T657, Calculation of Capital Gains Deduction for 2011
• Form T936, Calculation of Cumulative Net Investment Loss (CNIL) to December 31, 2011

Related topics

• Line 127 - Capital gains
• Qualified farm and fishing property
• Qualified small business corporation shares