When you sell personal-use property, such as cars and boats, you may have a capital gain or loss. In most cases you do not end up with a capital gain, because this type of property usually does not increase in value over the years. As a result, you may end up with a loss. Although you have to report any gain on the sale of personal-use property, generally you are not allowed to claim a loss. For more information and an example, see Personal-use property losses.
To calculate this gain or loss, follow these rules:
- If the adjusted cost base (ACB) of the property is less than $1,000, its ACB is considered to be $1,000.
- If the proceeds of disposition are less than $1,000, the proceeds of disposition are considered to be $1,000.
- If both the ACB and the proceeds of disposition are $1,000 or less, you do not have a capital gain or a capital loss. Do not report the sale on Schedule 3 when you file your income tax and benefit return.
- If the ACB or proceeds of disposition is more than $1,000, you may have a capital gain or loss. Report the sale on your Schedule 3.
- Listed Personal Property (LPP) gains do not include gains from selling or donating certified Canadian cultural property to a designated institution. For more information, see Selling or donating certified Canadian cultural property.
- If you acquire personal-use property for donation to a qualified donee in circumstances where it is reasonable to conclude that the acquisition of the property relates to an arrangement, plan, or scheme promoted by another person or partnership, the above rules do not apply. If this situation applies to you, calculate your capital gain or loss using the actual ACB and proceeds of disposition.
Completing your Schedule 3
Report gains arising from dispositions of personal-use property on line 158 in section 7 of Schedule 3.
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