Capital Gains Exemption on Sale of Principal Residence
Changes to the Principal Residence Exemption
The government has proposed maintaining the principal residence exemption, which allows taxpayers to exclude a certain amount of profit from the sale of their principal residence from their taxable income.
Increase in Inclusion Rate on Capital Gains
The federal government has proposed increasing the inclusion rate on capital gains from 50% to 66.67% for assets acquired after 2023. However, this change will not affect the exemption for principal residences.
Principal Residence Exemption Remains Intact
If you sell your principal residence, you can exclude all or a portion of the capital gains from your taxable income, regardless of the inclusion rate. This exemption applies to properties that were your principal residence at any time.
Primary Residence Exclusion
The sale of your primary residence is always 100% exempt from capital gains tax. This means that you can sell your home without paying any capital gains tax, regardless of the amount of profit you make.
Notice of Ways and Means Motion (NWMM)
On June 10, 2024, the Department of Finance issued a Notice of Ways and Means Motion (NWMM), which outlines the proposed changes to the capital gains inclusion rate. The NWMM is subject to parliamentary approval.
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