Principal Residence Exemption Calculator Canada

Calculate how much of your home sale is tax-free in Canada. Applies the CRA's principal residence exemption formula including the "+1 rule" for partial-year ownership.

Canadian Capital Gains Tax Guide Hub

Selling your home? Find out exactly how much is tax-free. This calculator applies the CRA's principal residence exemption formula — including the "+1 rule" — and shows your taxable capital gain if you didn't designate all years.

Property Details

Year you purchased the property

The calendar year you took ownership

Year you sold (or are selling) the property

Years designated as principal residence

Max 15 — years this property was your main home

You owned this property for 15 years (2010–2025).

The CRA's "+1 rule" adds one extra year to the exemption calculation — this accounts for the transition year when buying and selling in the same year.

Purchase & Sale Amounts

Original purchase price

What you paid when you bought it

Capital improvements made

Renovations that add permanent value (not repairs/maintenance)

Selling price

Selling costs (real estate commissions, legal fees)

Combined marginal tax rate (%)

Federal + provincial rate on additional income

Principal Residence Exemption Calculation

ACB (purchase price + improvements)$0

Net proceeds (selling price − costs)$0

Capital gain$0

Exemption formula

(1 + 15) ÷ 15 = 1.0000

Capped at 1 (cannot exceed 100% exempt)

Exempt fraction100.0%

Exempt capital gain$0

Taxable capital gain (before inclusion rate)$0

× 50% inclusion rate$0

Taxable capital gain (line 12700)$0

🎉 Fully Exempt — No Tax Owed

Total capital gain$0

Exempt amount$0

Taxable amount (line 12700)$0

Formula: Exempt = Capital gain × min(1, (1 + years designated) ÷ years owned). The +1 accounts for the CRA's "plus one" rule. Consult a Canadian tax professional for situations involving partial business use or non-residency.

How the principal residence exemption works

When you sell your home, any capital gain is usually completely exempt from tax if the property was your principal residence for every year you owned it. This is Canada's most valuable personal tax shelter — but partial exemptions apply if the property wasn't your main home for the entire ownership period.

The exemption formula:

Exempt amount = Capital gain × (1 + years designated as PR) ÷ total years owned

The "+1" in the formula is the CRA's "plus one rule" — it gives you one additional year of coverage, which handles the situation where you sell one home and buy another in the same calendar year.

If the result equals or exceeds 1 (i.e., you designated enough years), the entire gain is exempt.

When you might have a partial exemption

You rented out your home for several years before selling
You used part of your home as a business or rental space
You owned a cottage and a primary home simultaneously (only one can be designated per year after 1981)
You were a non-resident during some years of ownership

What counts toward the ACB

Your adjusted cost base includes the original purchase price, legal fees and commissions paid at purchase, and permanent capital improvements (renovations that add lasting value). Routine maintenance and repairs do not increase the ACB.

Flipped property exception

Even if a property qualifies as a principal residence, the exemption does not apply if the property is a "flipped property" — defined as a housing unit sold within 365 consecutive days of purchase (unless a qualifying life event applies). Flipped property income is treated as business income, fully taxable.

Reporting requirements

Since 2016, the CRA requires you to report all home sales on Schedule 3 and complete Form T2091(IND) to designate the property as your principal residence. Failure to report can result in denial of the exemption plus a penalty.

Disclaimer: For planning purposes only. Special situations (non-residency, partial business use, flipped property) may require different treatment. Consult a qualified Canadian tax professional.

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