Federal Capital Gains Tax on Real Estate
2024 Update: Capital gains inclusion rate increased to 66.67% for gains over $250,000 for individuals.
Basic Capital Gains Rules
When you sell real estate in Canada, including properties in Victoria, BC, you may be subject to federal capital gains tax on any profit from the sale.
Principal Residence Exemption
- Full Exemption: No capital gains tax on your principal residence
- One Per Family: Only one principal residence designation per family unit
- Victoria Application: Protects homeowners in expensive Victoria market
- Change of Use: Special rules when converting between personal and rental use
Investment Property Taxation
- Inclusion Rate: 50% of gains under $250K, 66.67% over $250K (2024)
- Victoria Market: High property values often trigger higher inclusion rate
- Holding Period: No minimum holding period required
- Business vs. Capital: Frequent flipping may be treated as business income
Victoria-Specific Considerations
Given Victoria's rapid property appreciation:
- Many investment properties exceed $250K gain threshold
- Principal residence exemption provides significant tax shelter
- Foreign ownership subject to additional federal reporting