After Tax Canada / Principal residence exemptionVersion française
Principal residence exemption calculator (2026)
Selling your home can be tax-free, but only for the years it was your principal residence. Enter the sale price, what you paid, the selling costs, your other income, and the years owned and designated to see how much of the gain the exemption shelters, and the tax on the rest, for every province.
Real estate commission, legal fees, and other costs of selling.
Your other income in the year of the sale: it sets the marginal rates the taxable gain is taxed at.
Tax years, purchase year to sale year included: a home bought in 2016 and sold in 2025 was owned in 10 tax years.
Years you designate the home as your principal residence on Form T2091.
Ontario · 2026
$6,849$6,849 tax on a $235,000 gain
$188,000 exempt · you keep $228,151
Your home-sale tax
| Capital gain on the sale | $235,000 |
| Exempt under the principal residence exemption | -$188,000 |
| Taxable capital gain | $47,000 |
| Federal income tax | $4,735 |
| Provincial income tax | $2,114 |
| Total tax on the sale | $6,849 |
| You keep from the gain | $228,151 |
On a $235,000 gain, designating the home for 7 of 10 years shelters 80.0% ($188,000) under the exemption, leaving a $47,000 taxable gain. Half of that ($23,500) is added to your other income and taxed at your marginal rates: $4,735 federal and $2,114 provincial. The figures reflect payroll-linked credits computed at your combined income, so if you have no employment income you could owe slightly more than shown.
How the principal residence exemption works in Canada
When you sell a home, the gain is the sale price minus what you paid for it minus the costs of selling, such as real estate commission and legal fees. The principal residence exemption shelters part of that gain: the exempt share is (1 + the years you designate the home as your principal residence) divided by the years you owned it, capped at the whole gain. The extra year, the plus-one, lets you designate both the old home and the new one in the year you move. Designate every year you owned the home and the whole gain is exempt; designate none of them and only the plus-one year is sheltered. The part that stays taxable is a capital gain, half of which is added to your other income and taxed at your marginal rates, federal plus provincial income tax only: no CPP, EI or QPIP comes off a capital gain. The exemption applies only if you, your spouse, your former spouse or your child ordinarily lived in the home, and your family unit can designate only one property as a principal residence for a given year. The plus-one year applies only if you were resident in Canada in the year you bought the home. You must report the sale on Schedule 3 and file Form T2091 even when the whole gain is exempt; in Quebec, file form TP-274-V and check box 109 on Schedule G. If you sell a home you owned for fewer than 365 consecutive days, the residential property flipping rule taxes the profit as business income and the exemption does not apply, with exceptions for life events such as a death, a divorce, or a job relocation. This calculator assumes you owned the property for at least 12 months, and it does not model land over 0.5 hectare, a change of use to rental, or a partial rental.
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Worked examples (2026)
| Sale | Years | Gain | Exempt | Tax |
|---|---|---|---|---|
| $650,000 sale · $400,000 cost · $15,000 fees · ON | 10 owned · 7 designated | $235,000 | $188,000 | $6,849 |
| $650,000 sale · $400,000 cost · $15,000 fees · QC | 10 owned · 7 designated | $235,000 | $188,000 | $8,331 |
| $800,000 sale · $500,000 cost · $20,000 fees · BC | 12 owned · 12 designated | $280,000 | $280,000 | $0 |
| $500,000 sale · $350,000 cost · $10,000 fees · AB | 5 owned · 0 designated | $140,000 | $28,000 | $16,682 |
2026 tax tables · verified 2026-09-20 · how we calculate
FAQ
How much tax do I pay when I sell my house in Ontario?
In 2026, on a $650,000 sale with a $400,000 purchase price and $15,000 of selling costs in Ontario, with $75,000 of other taxable income, the gain is $235,000, of which $188,000 is exempt under the principal residence exemption (7 of 10 years designated, so 80% is sheltered). The remaining $47,000 is a taxable capital gain, half of which ($23,500) is added to your other income, for $6,849 of income tax ($4,735 federal + $2,114 provincial), and you keep $228,151 of the gain.
How does the principal residence exemption work in Canada?
The exemption shelters part of the capital gain on a home you lived in. The exempt share is (1 + the years you designate the home as your principal residence) divided by the years you owned it, capped at the whole gain. The extra year, the plus-one, lets you designate both the old home and the new one in the year you move. The part that stays taxable is a capital gain, half of which is added to your other income and taxed at your marginal rates. You designate the years on Form T2091 when you report the sale on Schedule 3.
What if I only lived in the house for some of the years I owned it?
Then only part of the gain is exempt. In Alberta, a $500,000 sale with a $350,000 cost and $10,000 of selling costs, owned 5 years with none designated as a principal residence, leaves a $140,000 gain of which only the plus-one year is exempt: $28,000 (20%). The remaining $112,000 is a taxable capital gain, half of which ($56,000) is added to $60,000 of other income, for $16,682 of tax. Designate 9 of 10 years instead and the plus-one covers the tenth, so the whole gain is exempt.
Do I pay tax if I lived in the house the whole time I owned it?
No, if you designate every year you owned it. In British Columbia, an $800,000 sale with a $500,000 cost and $20,000 of selling costs, owned 12 years with all 12 designated, leaves a $280,000 gain that is fully exempt, so the tax is $0. You still have to report the sale on Schedule 3 and file Form T2091 even when no tax is owed.
Do I still have to report the sale if no tax is owed?
Yes. Since the 2016 tax year, every sale of a principal residence must be reported on Schedule 3 of your tax return, with Form T2091 designating the years, even when the whole gain is exempt. If you do not report the sale, the CRA can deny the exemption. In Quebec you must also file form TP-274-V and check box 109 on Schedule G, and failing to send TP-274-V can bring a penalty of $100 per month, up to $5,000.
How is the principal residence exemption different in Quebec?
The formula is the same, but the forms and the rates differ. On the same $650,000 sale with a $400,000 cost and $15,000 of selling costs, owned 10 years with 7 designated, Quebec taxes $8,331 ($3,942 federal after the 16.5% abatement + $4,389 provincial) against $6,849 in Ontario, and you keep $226,669 of the gain. In Quebec you designate the property on form TP-274-V and check box 109 on Schedule G of your Quebec return, as well as filing Form T2091 federally.
What if I sell within a year of buying?
Then the residential property flipping rule applies: since January 1, 2023, the profit on a residential property owned for fewer than 365 consecutive days is taxed as business income, not as a capital gain, and the principal residence exemption does not apply. Exceptions exist for life events such as a death, a divorce, or a job relocation. This calculator assumes you owned the property for at least 12 months.