Taxes · October 19, 2026
Do You Pay Capital Gains Tax When You Sell a House in Ontario?
One of the first questions sellers ask is whether they'll owe tax on the sale. The short answer: it depends entirely on what the property was to you. Here's how it generally works in Ontario, but treat this as a starting point, not tax advice, and confirm your own situation with an accountant.
Your principal residence: usually tax-free
If the house was your principal residence for all the years you owned it, the gain is generally exempt from capital gains tax under the principal residence exemption. You still have to report the sale on your tax return, but you typically won't owe tax on the increase in value. This covers most people selling the home they live in.
A rental or second property: usually taxable
If the property was a rental, a cottage, or otherwise not your principal residence, the gain is generally taxable. In Canada you're taxed on a portion of the capital gain (the inclusion rate), added to your income for the year. If you're a landlord who claimed depreciation (CCA) over the years, you may also face recapture, essentially paying some of that back on sale. These numbers can be significant, which is why timing a sale matters.
Inherited property: watch the date of death
When you inherit a home, your "cost" for tax purposes is usually its value at the date of death. If you sell soon after, there may be little or no gain. The longer you hold it afterward, the more any further increase in value could be taxable to you. This is one reason people often choose to sell inherited homes sooner rather than later.
Situations that get complicated fast
- You lived in the home for part of the time and rented it for part.
- You ran a business or claimed home-office expenses.
- You owned more than one property you could call a residence.
- You're a non-resident of Canada selling Canadian property.
- The property was held in a corporation or a trust.
In any of these cases, get professional advice before you sell. A good accountant can often structure or time things to save you real money.
The bottom line
Selling your own home? Usually no tax. Selling a rental, inherited, or second property? Usually some tax, and worth planning for. Either way, the tax question rarely changes whether you should sell, just how you prepare for it. If you'd like a fair cash offer on a Sudbury property while you sort out the tax side, we're glad to help, and we'll work alongside your accountant's timeline.
This article is general information for Greater Sudbury homeowners, not legal, tax, or financial advice. Please speak with a lawyer or accountant about your specific situation.