Canada Section 45(2) Change-of-Use Tax Calculator
Compare the 50% and 66.67% capital gains inclusion rates and quantify the deferral benefit of a Section 45(2) change-of-use election.
- Inclusion (to $250k)
- 50%
- First tier
- Inclusion (above)
- 66.67%
- Second tier
- Top Marginal Rate
- 43%
- Ontario combined
Formula & Statutory Rule
Formula
taxable_gain = min(gain, 250k) × 50% + max(0, gain − 250k) × 66.67%
Statutory Rule
section_45(2): defer change-of-use gain; inclusion_rate = 50% / 66.67%Regional Benchmark Reference
| Jurisdiction / Tier | Rate or Limit | Statutory Note |
|---|---|---|
| First $250k | 50% | Inclusion |
| Above $250k | 66.67% | Inclusion |
| Top rate | 43% | ON combined |
Frequently Asked Questions
What is Section 45(2)?
It is an election that defers the deemed disposition when a principal residence is converted to an income-producing property.
How does the inclusion rate work?
The first $250,000 of capital gain is included at 50%, and the excess at 66.67%.
How long does the election last?
The deferral can extend for up to four years, and longer if the property remains your principal residence.
Does the election avoid tax?
No. It defers the change-of-use gain until the property is actually sold.