If you’re a Canadian resident*, you can use form T657 to calculate your capital gains deduction for any capital gains that resulted from the disposition (sale or transfer) of one of the following types of property (if you disposed of them after May 1, 2006):
*For the purposes of the capital gains deduction, the Canada Revenue Agency (CRA) considers you to be a Canadian resident if you lived in Canada for part of 2017 and throughout 2016 or 2018.
When you dispose of one of these properties (in other words, when you sell or transfer it to someone else), and have a capital gain, you can claim a capital gains deduction that’s equal to the lowest of the following amounts:
- Your capital gains deduction limit for the year
- Your cumulative capital gains deduction limit for the year
- The net taxable capital gains that you reported in 2017 from the disposition of qualified farm or fishing property or qualified small business corporation shares or
- Your maximum capital gains deduction available for the year
If you need more information, check out the “Claiming a capital gains deduction” section of Guide T4037, Capital Gains.
Lifetime capital gains exemption (LCGE)
If, in 2017, you disposed of qualified small business corporation shares, you’re entitled to a lifetime capital gains exemption (LCGE) on $835,716 of your net gains. As of April 20, 2015, if you disposed of a qualified farm or fishing property, you’re entitled to a LCGE of $1,000,000 for qualified farm or fishing properties (QFFP). In either case, the maximum capital gains deduction you can make in any given year is half of your LCGE amount.
I am a Québec resident
If you want to calculate your capital gains deduction on qualified property, you’ll need to complete the TP-726.7-V: Capital Gains Deduction on Qualified Property form. Qualified property includes:
- Qualified farm or fishing property disposed of before 2014
- Qualified farm or fishing property disposed of after 2013 and
- Qualified small business corporation shares
If you disposed of resource property (such as, flow-through shares), complete the TP-726.20.2-V: Capital Gains Deduction on Resource Property form to find out if you can claim a deduction (and to calculate the amount of the deduction, if applicable).
For more information on claiming your capital gains deduction, refer to the Revenu Québec website.
Where do I claim this?
Follow these steps in H&R Block’s 2017 tax software:
- On the PREPARE tab, click the IN THIS SECTION icon.
- Under Investments (shares, securities, property, tax shelters, etc.) you bought or sold in 2017, click the Add This button.
- Click the PENSION PLANS AND INVESTMENTS icon. You will find yourself here:
- Under the BOUGHT/SOLD SECURITIES OR OTHER PROPERTY heading, select the checkbox labelled, Calculation of capital gains deduction (T657), then click Continue.
- When you arrive at the Calculation of capital gains deduction (T657) page, enter your information into the tax software.
