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 of one of the following types of property (if you disposed of them after May 1, 2006):
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 2016 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.
If, in 2016, you disposed of qualified small business corporation shares, you’re entitled to a lifetime capital gains exemption (LCGE) on $824,176 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.
If you’re a resident of Québec, you’ll need to complete form TP-726.7-V: Capital Gains Deduction on Qualified Property to calculate your capital gains deduction.
*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 2016 and throughout 2015 or 2017.
Where do I claim this?
Follow these steps in H&R Block’s tax software to file your 2016 taxes:
- On the PREPARE tab, click the LET’S TALK ABOUT 2016 icon.
- Select the checkbox labelled, I had investments and/or investment income, or I bought and/or sold property.
- 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.