Capital Gains Inclusion Rate in Canada (2026 Update)

In 2024, the federal government announced a significant change to how capital gains are taxed in Canada, effective for dispositions after June 25, 2024. The capital gains inclusion rate — the percentage of a capital gain that is added to your taxable income — increased from 50 percent to 66.67 percent for gains above $250,000 for individuals, and to 66.67 percent on all gains for corporations and trusts. This change has major implications for anyone selling property in Manitoba, including homeowners, investors, and estate executors.

For the principal residence of an individual, the principal residence exemption continues to shelter the full gain from tax. However, for investment properties, rental homes, cottages, and properties sold as part of an estate where the principal residence exemption does not fully apply, the higher inclusion rate means a substantially larger tax bill. Understanding how this change works — and what strategies are available to minimize its impact — is essential for anyone planning a property sale in 2026.

If you are handling a property sale as part of an estate, our executor guide to selling estate property in Manitoba provides a complete legal and financial roadmap, and our guide on capital gains tax on inherited property in Canada addresses the specific tax implications.

How the New Inclusion Rate Works

Under the current rules, the first $250,000 of capital gains realized by an individual in a given tax year is included at the traditional 50 percent rate. Any capital gain above $250,000 is included at 66.67 percent. For corporations and trusts — including many estate trusts — the 66.67 percent rate applies to all capital gains from the first dollar.

To illustrate the impact: if you sell an investment property in Winnipeg with a capital gain of $400,000, the first $250,000 is included at 50 percent ($125,000 taxable), and the remaining $150,000 is included at 66.67 percent ($100,005 taxable). Your total taxable capital gain is $225,005. Under the old rules, the entire $400,000 gain would have been included at 50 percent for a taxable amount of $200,000 — a difference of $25,005 in taxable income.

Impact on Estate Sales in Manitoba

The higher inclusion rate has a particularly significant impact on estate sales. When a person dies, they are deemed to have disposed of all their capital property at fair market value immediately before death. If the deceased owned property that is not a principal residence — or if the principal residence exemption does not cover the full gain — the estate faces capital gains tax at the higher inclusion rate on gains above $250,000.

For estate trusts, which are often used to manage the deceased's property, the situation is even more pronounced. Testamentary trusts lose access to the $250,000 threshold — the 66.67 percent rate applies to all capital gains realized within the trust. This makes it more important than ever for executors to work with a qualified tax professional and to consider whether distributing the property to beneficiaries before selling could result in a better tax outcome.

Strategies to Minimize the Tax Impact

There are several legitimate strategies to manage capital gains tax under the new rules. Timing your sale to spread gains across multiple tax years can keep you below the $250,000 threshold in each year. For estates, distributing property to beneficiaries before selling allows each beneficiary to use their own $250,000 threshold. The principal residence exemption should be carefully optimized across all properties owned by the family.

Charitable donations of appreciated property, the lifetime capital gains exemption for qualified small business shares, and reserves on installment sales are all tools that may apply in specific circumstances. The complexity of these strategies underscores the importance of professional tax advice before selling any property with a significant capital gain.

For official information on capital gains taxation, visit the Canada Revenue Agency — Capital Gains page. For local selling options, read about how to sell a house fast in Winnipeg.

At SellMyHomeCash.ca, we work with estate executors, investors, and families navigating capital gains considerations every week. While we do not provide tax advice, we can coordinate our closing timeline with your tax planning to help minimize your overall tax burden. Call (204) 800-6640 to discuss your situation.