Capital Gains changes will impact Seniors
The Government of Canada recently announced changes to Capital Gains, starting January 1, 2026.
What are Capital Gains?
Capital Gains occur when an asset is sold for more than the purchase price, together with the cost of upgrades. The difference between this and the sale price is the Capital Gain. Traditionally in Canada, 50% of the Capital Gain has been added to the taxpayer’s income in the year of sale, and taxes are paid on their total income in that year.
A problem for Seniors
This is particularly problematic for seniors as they choose to downsize, selling their home and moving to a condo or care facility, or if they die. Upon death, the deceased person is immediately deemed by CRA to have sold all their assets as of the date of death, and taxes on the Capital Gains are assessed against the Estate.
Tax changes announced:
Starting in 2026, Capital Gains taxes are to increase from 50% to 75% for Capital Gains of more than $250,000 per year, and for all Trusts and Corporations experiencing Capital gains.
What can I do to minimize my tax?
- Plan sales of assets over a period of years, so your estate doesn’t get hit with a one-time whammy upon death.
- Limit annual sales so each year’s Capital gain is less than $250,000
- Take advantage of the Lifetime Capital Gains exemption increase from $500,000 to $1.25 million.
Ruth Pradzynski is a lawyer with A.R.E. Law,
1758 McAra Street, Regina