What is the capital gains deduction limit
An eligible individual is entitled to a cumulative lifetime capital gains exemption (LCGE) on net gains realized on the disposition of qualified property. This exemption also applies to reserves from these properties brought into income in a tax year.
Under proposed changes for 2024, there are two lifetime capital gains exemption (LCGE) limits:
- For dispositions in Period 1 from January 1 to June 24, 2024, the limit is $1,016,836.
- For dispositions in Period 2 from June 25 to December 31, 2024, the limit is $1,250,000.
If you disposed of qualified farm or fishing property (QFFP) or qualified small business corporation shares (QSBCS), or claimed a reserve for a disposition of QFFP or QSBCS in previous years, you may be eligible for the LCGE.
For dispositions of QFFP or QSBCS at any time in 2024, only half of the capital gain is included in your taxable capital gains, so the cumulative capital gains deduction is limited to half of the LCGE amount available.
For dispostions of QFFP after April 20, 2015, and before January 1, 2024, the LCGE is increased to $1,000,000. This additional deduction does not apply to dispostions of QSBCS. There is no additional deduction for QFFP in 2024.
| Year | Lifetime capital gains limit |
|---|---|
| 2024 | Period 1: $508,418 (1/2 of $1,016,836) Period 2: $625,000 (1/2 of $1,250,000) |
| 2023 | $485,595 (1/2 of $917,190) |
| 2022 | $456,815 (1/2 of $913,630) |
| 2021 | $446,109 (1/2 of $892,218) |
| 2020 | $441,692 (1/2 of $883,384) |
| 2019 | $433,456 (1/2 of $866,912) |
| 2018 | $424,126 (1/2 of $848,252) |
| 2017 | $417,858 (1/2 of $835,716) |
| 2016 | $412,088 (1/2 of $824,176) |
| 2015 | $406,800 (1/2 of $813,600) |
Note
The limit is indexed to inflation, using the Consumer Price Index data as reported by Statistics Canada.
Because the capital gains inclusion rate in 2024 is 50%, only 50% of the capital gain from a disposition of property is taxable.
In a year, you can claim any amount of the deduction you want, up to the maximum allowable amount you calculated.
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