Recent investment property sales will deliver somewhat higher returns than Canadian vendors might have expected, thanks to a newly announced temporary reversion to a 50 per cent inclusion rate on capital gains. The reprieve from counting 66.6 per cent of earned profits toward vendors’ taxable incomes will be retroactive to June 25, 2024 and will stay in place until Jan. 1, 2026.
“Given the current context, our government felt that it was the responsible thing to do,” says Canada’s Finance Minister, Dominic LeBlanc. “The deferral of the increase to the capital gains inclusion rate will provide certainty to Canadians, whether they be individuals or business owners, as we quickly approach tax season.”
Two other tax measures related to capital gains arising from 2024 federal budget will remain in place. That includes an increase in the lifetime capital gains exemption on the sale of small businesses, farms and fishing properties, which was reset from $1,016,836 to $1.25 million as of June 25, 2024, and the introduction of a new incentive for entrepreneurs, which takes effect for the 2025 tax year. The latter gives investors in specified categories a 33.3 per cent inclusion rate on a lifetime maximum of $2 million of eligible capital gains.
