 # What are Capital Gains? ### At a Glance

When you sell a capital asset (shares, real estate, or cars etc.) at a profit, that is a capital gain. A capital gain is what remains after you sell an asset for more than you paid for it.

In Canada, 50% of a capital gain is taxed at a marginal rate. A marginal tax rate of say, 10%, means that for every \$10 you earn, \$1 is taken as a tax. Consider the example below:

### A Simplified Example

This year, a realtor based in Rossland sold a housing unit for \$200,000 having constructed it for \$130,00. Based on that Capital Gain (\$70,000), his tax rate is 7.70%.

The realtor's capital gain will be calculated as follows:
Marginal Tax Rate: 7.70%
Capital Gain: \$70,000 (\$200,00 - \$130,000)

Capital Gain that remains after tax:
Only 50% of Capital Gain is taxed at a Marginal Tax Rate: \$35,000 (\$70,000 x 50%)
Capital Gain Tax: \$2,695 (\$35,000 x 7.70%)

Net Capital Gain (or Take-home Capital Gain):
\$67,305 (\$35,000 - \$2,695 + Untaxed 50% Capital Gain [\$35,000]) 