How to handle a stock with a huge capital gain + MORE Jul 23rd

If you hold investments in a taxable non-registered account, then income tax considerations ought to be part of your investing decision-making process. Although capital gains tax rates in Canada are relatively low, with only 50% of a capital gain being taxable to an investor, the dollars of tax payable can grow large if an investment performs particularly well or if a stock is held for many years.

Here are five things you should think about when a capital gain could be significant, and some solutions investors can consider.

1. The break-even return for a replacement stock

The break-even return is worth considering if you are on the fence about paying tax to sell an investment. 

Imagine you own a stock that you purchased for $10,000 and is now worth $20,000. There is a $10,000 deferred capital gain. If we assume you are in a 35% marginal tax bracket, the tax payable on the sale of the stock would be $1,750.

That tax would be 8.75% of the sale price in this example. That is, $1,750 divided by $20,000 would disappear to tax…

For many Canadians, selling a property can come with a surprise: the capital gains tax. Whether it’s a cottage, rental property, or former principal residence, understanding how capital gains are calculated and how a professional appraisal can significantly reduce your tax burden is crucial. 

As a professional appraiser, I’ve seen firsthand how accurate, certified valuations can help Canadians save thousands legally and confidently. Here, I’m breaking down why (and when) it’s a smart idea to get one.

How capital gains are calculated on Canadian real estate

Capital gains are the profit earned from the sale of a capital asset—like real estate—when the sale price exceeds the property’s adjusted cost base (ACB) plus any associated expenses (e.g., legal fees, commissions, renovations). In Canada, 50% of this gain is taxable, and you must report it on your personal income tax return.

Capital gains tax does not apply to the sale of your principal residence, as long as it was your principal residence for the entire time you owned it…

Savings comparison tool

Find the best and most up-to-date savings rates in Canada using the comparison tool below. Plus, use the filters to assess your estimated return based on the size of your balance.

Advertisement

Why trust us
MoneySense is an award-winning magazine, helping Canadians navigate money matters since 1999. Our editorial team of trained journalists works closely with leading personal finance experts in Canada. To help you find the best financial products, we compare the offerings of major institutions, including banks, credit unions and card issuers. Learn more about our advertising and trusted partners.

Best high-interest savings account rates in Canada

Generally, savings accounts offer very low interest rates. So, if you want to earn on your deposits (rather than simply using your account as a temporary “holding tank” or directing to longer-term saving and investing vehicles), a savings account with a high interest rate is a no-brainer…