Capital gains at death calculator
Under s.70(5) of the Income Tax Act, you're deemed to have disposed of all your capital property at fair market value immediately before dying. This calculator estimates the tax on the final return, including spousal rollover and Lifetime Capital Gains Exemption scenarios.
How this is calculated
- 1.FMV at death: $800,000
- 2.Adjusted cost base: $200,000
- 3.Capital gain: $800,000 − $200,000 = $600,000
- 4.Taxable portion (50% inclusion): $300,000
- 5.Estimated tax at 53.53% marginal rate: $160,590
Figures shown are approximate, calculated from current publicly-available statutes and standard formulas. Final amounts depend on your specific circumstances — assets in your name versus jointly held, beneficiary designations, debts, province-specific exemptions, and applicable tax credits. For numbers you can act on, a Canadian accountant or licenced estate planner can verify against your actual situation.
Frequently asked questions
What's the deemed disposition rule?
Under Income Tax Act s.70(5), at death you're deemed to have disposed of all your capital property at fair market value immediately before dying. Built-up capital gains are recognized on your final return, taxable at 50% inclusion rate. This applies to non-registered investments, real estate (other than principal residence), business interests, art, and other capital property.
What's the spousal rollover?
Under s.70(6), capital property passing to a qualifying spouse or common-law partner (or to a qualifying spousal trust) transfers at the deceased's ACB rather than FMV — deferring the capital gain until the surviving spouse eventually disposes of or dies holding the property. This is the single largest tax deferral available to Canadian married couples at death.
Does my principal residence trigger capital gains?
Generally no. The principal residence exemption shelters capital gains on a home that has been your principal residence for every year you owned it. Designation must be made on the final tax return. Cottages and second homes don't automatically qualify; only one property per family unit per year can claim the exemption.
Is RRSP withdrawal at death a capital gain?
No — RRSPs/RRIFs at death are treated as ORDINARY income (the full plan balance is added to the final-return income), not as a capital gain. This calculator handles capital property only. For RRSP-at-death tax, see our RRSP at Death Tax Calculator.
What's the Lifetime Capital Gains Exemption?
The LCGE shelters up to $1.25M (2026) of capital gains on Qualified Small Business Corporation shares or qualified farm/fishing property. Available per individual, so couples can shelter up to $2.5M+ combined through proper planning. Doesn't apply to ordinary capital property — only specific business and farm assets.
How can I reduce capital gains tax at death?
Common strategies — spousal rollover where eligible (defers entirely); claim the principal residence exemption on the highest-gain home; use the LCGE on QSBC shares or qualified farm property; estate freeze to cap your tax exposure at current value; charitable bequests of appreciated securities (in-kind donation eliminates the gain inclusion). Each requires planning before death — limited options at the time of death itself.