Line 25400 – Capital gains deduction
- Return type: Personal income tax and benefit return
- Tax year: 2025
If you have a capital gain on the sale of certain properties, you may be eligible for the lifetime capital gains deduction (half of the lifetime capital gains exemption (LCGE))
For information on recent updates and changes affecting capital gains, see New for capital gains.
What is a capital gains deduction
It is a deduction that you can claim against taxable capital gains you realized from the disposition of certain capital properties. You can reduce your taxable income by claiming this deduction on line 25400 of your return.
Who can claim
Start of question
You generally have to meet all of the conditions above to be able to claim the capital gains deduction.
Resident of Canada throughout 2025
For the purpose of this deduction, the Canada Revenue Agency (CRA) will also consider you to be a resident throughout 2025 if you meet both of the following conditions:
- You were a resident of Canada for at least part of 2025
- You were a resident of Canada throughout 2024 or 2026
Residents of Canada include factual and deemed residents. To get help with determining your residency status, go to Determining your residency status.
What capital gains are eligible for the capital gains deductions
You may be able to claim the capital gains deduction on taxable capital gains you have in 2025 from any of the following:
- dispositions of qualified small business corporation shares (QSBCS)
- dispositions of qualified farm or fishing property (QFFP)
- a reserve brought into income in 2025 from the disposition of either QSBCS or QFFP
- the allocation and designation by a trust of taxable capital gains reported in the trust's tax year on the disposition of QSBCS or QFFP
- the allocation and designation by a trust of taxable capital gains resulting from a reserve brought into income in the trust's tax year relating to a disposition of QSBCS or QFFP in a prior tax year of the trust
What is the capital gains deduction limit
Under proposed changes, for 2025, the lifetime capital gains exemption (LCGE) is $1,250,000 for dispositions of qualifying property. This means that the maximum capital gains deduction for qualifying properties is $625,000 (50% of $1,250,000).
Previous years
2015 to 2024
Capital gains deduction limits on dispositions of qualifying capital property for 2015 to 2024Year Lifetime capital gains limit 2024 (after June 24) $625,000 (50% of $1,250,000) for Period 2 2024 (before June 25) $508,418 (50% of $1,016,813) for Period 1 2023 $485,595 (50% of $917,190) 2022 $456,815 (50% of $913,630) 2021 $446,109 (50% of $892,218) 2020 $441,692 (50% of $883,384) 2019 $433,456 (50% of $866,912) 2018 $424,126 (50% of $848,252) 2017 $417,858 (50% of $835,716) 2016 $412,088 (50% of $824,176) 2015 $406,800 (50% of $813,600)
The limit is indexed to inflation, using the Consumer Price Index data as reported by Statistics Canada.
Tax tip
You can claim any amount of the capital gains deduction that you want to in a year, up to the maximum allowable amount that you calculated.
How to claim
Complete Form T657, Calculation of Capital Gains Deduction, to calculate your capital gains deduction. If you have investment income or investment expenses in any years from 1988 to 2025, you must also complete Form T936, Calculation of Cumulative Net Investment Loss (CNIL) to December 31, 2025.
After you have completed Form T657, claim the amount, up to the maximum allowable amount, of the total capital gains deduction on line 25400.
If you are including a taxable capital gain in your income resulting from a reserve that relates to a disposition in a prior year of capital property that is QSBCS or QFFP, the amount of the capital gains deduction that you can claim is based on the year that the property was disposed of. This also applies to any taxable capital gain allocated and designated to you, by a trust which had claimed a capital gains reserve on a disposition of QSBCS or QFFP in a prior year of the trust.
Under proposed changes, if you are claiming the capital gains deduction in respect of capital gains reported by a partnership you are a member of, or capital gains reported to you on a T3 slip of a trust (such as a graduated rate estate) and the partnership or trust has a fiscal period or taxation year that begins before June 25, 2024, and ends on or after January 1, 2025, and the partnership or trust disposed of QFFP or QSBCS in 2024 before June 25, 2024, you must use Part 1 of “Chart 2025” on Form T657.
Where the partnership or trust disposed of QFFP or QSBCS in 2024 after June 24, 2024, you must use Part 2 of “Chart 2025” on Form T657.
If you are claiming the capital gains deduction in respect of capital gains reported by a partnership or trust that has a fiscal period or taxation year that begins after June 25, 2024, and ends on or after January 1, 2025, and the partnership or trust indicates that the capital gains relate to a capital gains reserve claimed in 2024 in respect of a disposition in 2024, before June 25, 2024, of property that was a QFFP or a QSBCS, you must use Period 1 of “Chart 2024” on Form T657.
Where the partnership or trust indicates that the capital gain relates to a capital gains reserve claimed in 2024 in respect of a disposition in 2024, after June 24, 2024, of property that is QFFP or QSBCS, you must use Period 2 of “Chart 2024” on Form T657.