In this highly informative episode of The Country Club Podcast, Diana Cassidy-Bush welcomes Chartered Professional Accountant Ben Bryden from Wilkinson & Company to break down one of the most misunderstood and most consequential topics in real estate: capital gains tax.

Ben walks listeners through the whirlwind of tax changes proposed since 2024, explaining what was supposed to happen, what actually happened, and what property owners should know as we approach 2026.

Whether you own a cottage, rental, farmland, or you’re thinking about selling in the next few years, this conversation gives you the clarity you need to plan confidently and avoid surprises.

Key Takeaways

1. The Capital Gains Inclusion Rate Remains at 50% as of this recording

Despite the upheaval from 2024–2025, the proposed increase to a ⅔ inclusion rate was cancelled in March 2025, leaving the long-standing 50% rate in place. This eliminates the urgency sellers once felt but future budgets may still bring change.

2. Timing Matters—Your Income Year Affects Your Tax Bill

Consider selling in a year where your income is lower to reduce the marginal tax rate applied to your gain. Selling early in a calendar year can defers tax payment to the following April.

3. The 12-Month Rule Automatically Applies

If you sell a property within 12 months of buying it, the profit is generally treated as business income (100% taxable) rather than a capital gain (50% taxable). Only specific life events may qualify for exemptions.

4. The Principal Residence Exemption (PRE)

For people with multiple properties (house + cottage), thoughtful planning is key. You must choose which property to designate for PRE based on accrued gain per year. If you use the PRE on a cottage sale, future gains on your primary home may become taxable.

5. Mixed-Use Properties Have Special Rules

If part of your home is used for rental or business purposes:

• You may need to apportion the sale value between personal and income-producing use.
• Using more than 50% of your home for business can jeopardize the PRE entirely.

The principal residence exemption typically covers the home + up to ½ hectare (1.24 acres) of land. Additional land may be taxed separately unless you can prove it’s necessary to the home’s use.

7. “Change of Use” Can Trigger a Taxable Event

If you convert a principal residence into a rental (or vice versa), the CRA treats it as a deemed disposition—a taxable capital gain—even if you don’t sell the property. You can avoid this by filing a special election with your tax return. Missing the election can result in penalties and unexpected taxes.

8. Keep Every Receipt for Capital Improvements

There is no 7-year rule for cost-base documentation.

• Improvements that increase value (steel roof, addition, upgraded countertops) raise your adjusted cost base and lower your eventual capital gain.
• Repairs that simply restore condition (new shingles, repainting) do not count as capital improvements.

When someone passes away:

• Property transferred to a spouse rolls over tax-free.
• Property transferred to children triggers capital gains at fair market value.
• Large real-estate-heavy estates may face liquidity issues without planning.

Farms actively used in a farming business may qualify for:

• The Lifetime Capital Gains Exemption (LCGE)—now up to $1.25M
• Or special rollover provisions for transferring farmland to children

11. Consult Your Realtor and Accountant Before Selling

Most tax pitfalls can be avoided with proper planning—but only if you speak to professionals before the transaction. Waiting until after often limits your options.

Time Stamps:

00:00 – 00:45

Welcome to The Country Club Podcast and today’s focus on taxes within the “Invest” pillar. Introduction to capital gains as a major consideration for property owners.

00:45 – 02:16

Introducing guest expert Ben Bryden, CPA of Wilkinson & Company, and today’s topic: changes to the capital gains tax.

02:16 – 03:34

Diana shares the confusion many homeowners experienced around earlier announcements about capital gains changes. Ben begins explaining the timeline.

03:34 – 04:35

Ben outlines the major proposed change: increasing the inclusion rate from 50% to two-thirds, and why it caused panic.

04:35 – 05:15

The government delays implementation; sellers scramble. The CRA announces it isn’t ready—leading to more confusion.

05:15 – 06:12

Final decision in March 2025: the inclusion-rate change is cancelled. Relief and frustration follow.

06:12 – 07:05

Why the government likely pursued this strategy—raising revenue without increasing tax rates.

07:05 – 07:45

Why updates haven’t been clearly communicated. Political motivations and an attempt to “move past” the issue.

07:45 – 08:44

What capital gains look like today for someone selling a second property.

08:44 – 09:45

Best timing strategies: how your income year impacts the tax you’ll pay on a sale.

09:45 – 10:40

Explaining the new 12-month rule: how profits become business income by default.

10:40 – 11:30

Clarifying how to avoid the 12-month rule through exceptions and intent.

11:30 – 12:19

How the Principal Residence Exemption works when you own multiple properties.

12:19 – 13:15

Choosing which property to designate for the PRE—and how that affects future capital gains.

13:15 – 14:01

Partial-use and rental situations: how mixed-use affects your tax obligations.

14:01 – 15:02

Land size considerations: why only ½ hectare qualifies for the PRE.

15:02 – 16:14

Using part of your home for business or rental: how “primary purpose” affects PRE eligibility.

16:14 – 17:21

Gray areas and common traps in the Income Tax Act.

17:21 – 18:15

The surprise of “change of use” rules—how converting a home to a rental or vice versa can trigger a taxable event.

18:15 – 19:05

The importance of filing the correct elections to avoid unintended capital gains.

19:05 – 20:18

HST considerations: when HST applies to land, newly built homes, or property used in business.

20:18 – 21:07

Why consulting an accountant before selling is essential.

21:07 – 22:04

Tracking capital improvements: what counts as capital vs. repairs and why receipts matter.

22:04 – 23:15

Examples of capital vs. non-capital improvements—roofs, countertops, renovations.

23:15 – 24:15

Why keeping documentation for all improvements is critical, even decades later.

24:15 – 25:10

Introducing estate planning considerations—how real estate is taxed upon death.

25:10 – 26:03

The rollover rule for spouses and capital gains treatment when passing property to children.

26:03 – 27:10

Special rules for farmland, including eligibility for the Lifetime Capital Gains Exemption.

27:10 – 28:15

The distinction between active farming vs. renting farmland and why it matters for tax purposes.

28:15 – 29:19

Ben’s final advice: talk to professionals early to avoid costly surprises.

29:19 – 30:26

Why annual federal budgets may continue to bring changes to real estate taxation.

30:26 – 31:54

Closing thoughts and preview of January’s episode on setting real estate intentions for 2026.

31:54 – 32:45

Final sign-off and reminder to consult professionals for personalized guidance.

Learn more about Ben Bryden, CPA, CA - with Wilkinson & Company LLP at https://www.wilkinson.net/

Connect with Diana Cassidy-Bush:

Facebook: https://www.facebook.com/DianaCassidyBushRealEstate/

Instagram: https://www.instagram.com/dianacassidybush

Linked In: https://www.linkedin.com/in/diana-cassidy-bush-aa2318b6/

YouTube: https://www.youtube.com/@dianacassidy-bush2027

Website: https://dianacassidybush.ca/

Email: [email protected]

This podcast is for educational purposes only - real estate isn’t one-size-fits-all! Every deal, market, and situation is unique, so be sure to get professional advice tailored to your needs. If you’d like to discuss your real estate journey, we’d love to chat - reach out anytime. Thanks for listening!