Claiming a capital gains reserve

When you sell a capital property, you usually receive full payment at that time. However, sometimes you receive the amount over a number of years.

For example, you may sell a capital property for $50,000 and receive $10,000 when you sell it and the remaining $40,000 over the next four years.

When this happens, you may be able to claim a reserve. Usually, a reserve allows you to report a portion of the capital gain in the year you receive the proceeds of disposition.

Note
You may be able to claim a capital gains deduction and reduce your taxable income. For more information, see Capital gains deduction.

For more information on reserves, see:

• Who can claim a reserve?
• How do you calculate and report a reserve?
• Including a previous year reserve in income.
• Reserve for a gift of non-qualifying securities

Forms and publications

• Guide T4037, Capital Gains
• Form T2017, Summary of Reserves on Dispositions of Capital Property
• Schedule 3, Capital Gains (or losses)

Related topics

• Line 349 - Donations and Gifts