What’s the Capital Gains Tax for an Investment Property 2025?

Capital gains on Canadian investment property are still taxed at a 50% inclusion rate in 2025.

This means half of your profit is added to your income and taxed at your marginal rate. For example, if you bought a Toronto condo for $500,000 and sold it for $1,000,000, your gain is $500,000. Under current rules, $250,000 would be taxable income, and $250,000 would remain tax-free.

Did the Capital Gains Tax Change in 2025?
No, the proposed increase was cancelled. In Budget 2024, the federal government planned to raise the inclusion rate to 66.67% for higher gains and for corporations. The change was deferred to January 2026, but on March 21, 2025, Prime Minister Mark Carney officially cancelled the proposal. As of today, the 50% inclusion rate remains in place.

Are Principal Residences Exempt from Capital Gains Tax?
Yes, your principal residence is fully exempt. Capital gains tax applies only to investment or secondary properties. If you have claimed capital cost allowance (CCA) on a rental, you may also face depreciation recapture. Renovations, transaction costs, and eligible expenses can impact your final gain, so maintaining detailed records is essential.

Why Does This Matter for Toronto Investors?
In Toronto’s 2025 market, where condos average around $700,000 and detached homes exceed $1.5M, capital gains can quickly surpass six figures. While the inclusion rate remains 50%, the size of these gains makes tax planning and an exit strategy essential.

How Can Fox Marin Help?
With $580M+ in sales, 1,000+ transactions, and 450+ five-star Google reviews, Fox Marin Real Estate helps investors navigate both the market and the math. We not only advise on pricing and strategy but also partner with trusted tax professionals to ensure you understand how capital gains will impact your bottom line.

Key Takeaway (2025 Update)
Capital gains on investment properties remain taxed at 50% inclusion in 2025. The proposed hike to 66.67% was cancelled. Principal residences are still exempt. Careful planning is essential in Toronto’s high-value market.

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