How do you calculate your capital gain or loss?
To calculate your capital gain or loss, you need to know the following three amounts:
- the proceeds of disposition;
- the adjusted cost base (ACB); and
- the outlays and expenses incurred to sell your property.
When calculating the capital gain or loss on the sale of capital property that was made in a foreign currency:
- convert the proceeds of disposition to Canadian dollars using the exchange rate in effect at the time of the sale;
- convert the adjusted cost base of the property to Canadian dollars using the exchange rate in effect at the time the property was acquired; and
- convert the outlays and expenses to Canadian dollars using the exchange rate in effect at the time they were incurred.
When you sell, or are considered to have sold, a capital property for more than the total of its ACB and the outlays and expenses incurred to sell the property, you have a capital gain. When you sell, or are considered to have sold a capital property for less than its ACB plus the outlays and expenses incurred to sell the property, you have a capital loss. See how to calculate a capital gain in this example.
Special rules can sometimes apply that will allow you to consider the cost of the capital property to be an amount other than its actual cost. For more information, see Adjusted cost base (ACB).
Generally, the inclusion rate for 2014 is 1/2. This means that you multiply your capital gain for the year by this rate to determine your taxable capital gain. Similarly, you multiply your capital loss for the year by 1/2 to determine your allowable capital loss. If you need a rate for a prior year see inclusion rates for previous years.
You can apply 1/2 of your capital losses against any taxable capital gains in the year. For more information see Losses and deductions.
If you donate certain properties to a qualified donee special rules apply. For more information, see Capital gains realized on gifts of certain capital property.
Before 1972, capital gains were not taxed. Therefore, if you sold capital property in 2014 that you owned before 1972, you have to apply special rules when you calculate your capital gain or loss to remove any capital gains accrued before 1972. To calculate your gain or loss from selling property you owned before 1972, use Form T1105, Supplementary Schedule for Dispositions of Capital Property Acquired Before 1972.
Completing your tax return
Use Schedule 3, Capital gains (or losses), to calculate and report all your capital gains and losses. Do not include any capital gains or losses in your business or property income, even if you used the property for your business. For more information see Completing Schedule 3.
If you donated certain properties to a qualified donee, you will also have to complete Form T1170, Capital gains on gifts of certain capital property.
Forms and publications
- Guide T4037, Capital Gains
- Pamphlet P113, Gifts and Income Tax
- Form T1170, Capital gains on Gifts of Certain Capital Property
- Schedule 3, Capital gains (or losses)
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