Understanding Capital Gains Tax on Your Edmonton Home Sale: Secrets to Keeping More of Your Equity
If you’ve lived in Edmonton for any length of time, you know that our real estate market is unique. From the historic charm of Glenora and Strathcona to the sprawling new developments in Windermere or Chappelle, owning a piece of this city is a great investment. But as a homeowner, there is one question that eventually keeps everyone up at night when they start thinking about moving: "Is there a way around capital gains tax on a home sale?"
It’s a valid concern. You’ve worked hard to pay down your mortgage, you’ve spent your weekends landscaping or renovating the kitchen, and you’ve watched the market grow. The last thing you want to do is hand over a massive chunk of your hard-earned equity to the government.
As the top real estate agent in Edmonton, I deal with these questions every day. My name is Derek Keet, and my goal is to ensure that when you sell your home, you keep as much money in your pocket as humanly possible. Whether it’s through navigating tax implications or utilizing One Percent Realty’s posted commission rates, I am here to maximize your return.
Let’s dive deep into the world of capital gains, how it affects Edmontonians, and how you can legally and strategically protect your wealth.
What Exactly is Capital Gains Tax?
Before we talk about "getting around" it, we need to understand what it is. In simple terms, a capital gain is the profit you make when you sell an asset (like a house) for more than you paid for it. If you bought a home in Summerside for $400,000 and sold it years later for $600,000, that $200,000 difference is your capital gain.
In Canada, capital gains are not taxed at 100%. Instead, a portion of that gain—historically 50%, though tax laws can evolve—is added to your annual income and taxed at your marginal tax rate.
The Holy Grail: The Principal Residence Exemption
Now, here is the good news for the vast majority of Edmonton homeowners. If you are selling the home you live in, you likely won't owe a dime in capital gains tax.
This is thanks to the Principal Residence Exemption (PRE). In Canada, your primary home is generally exempt from capital gains tax. This is the government’s way of allowing families to build wealth through homeownership without being penalized when they decide to upsize, downsize, or move across town.
To qualify for this "way around" the tax, a few conditions must be met:
Ownership: You must own the property (solely or jointly).
Inhabitation: You, your current or former spouse, or your child must have "ordinarily inhabited" the home during the year.
Designation: You can only designate one property as your principal residence for any given year.
If you’ve lived in your Edmonton home the entire time you’ve owned it, you can breathe easy. When we list your home and find that perfect buyer, that profit is yours to keep.
When Capital Gains Do Apply (and How to Minimize Them)
While the Principal Residence Exemption covers most people, there are several scenarios where Edmontonians might find themselves facing a tax bill. This is where having a knowledgeable expert like Derek Keet in your corner becomes vital.
1. The Revenue Property Scenario
Edmonton is a fantastic city for real estate investors. Perhaps you bought a bungalow near the University of Alberta to rent out to students, or a condo downtown for short-term rentals. Because these are not your "Principal Residence," they are subject to capital gains tax when you sell.
How to lower the bill:
Track Your Adjust Cost Base (ACB): Your "profit" isn't just the sale price minus the purchase price. You can deduct the costs of buying and selling (including legal fees and my commission) and, crucially, the cost of capital improvements. If you put a new roof on that rental property or finished the basement, those costs get added to your "book value," which shrinks the taxable gain.
Timing Your Sale: If you know you are heading into a year where your personal income will be lower (perhaps retirement or a sabbatical), selling then might put you in a lower tax bracket, reducing the percentage of tax you pay on the gain.
2. The "Change in Use" Rule
This is a trap many Edmonton homeowners fall into. Let’s say you lived in a house in St. Albert for five years, then moved into a new home but kept the first one as a rental property. The moment you stopped living there, the CRA considers you to have "sold" the house to yourself at fair market value. Any increase in value from that point forward is taxable.
Maximizing Your Equity: It’s Not Just About Taxes
While everyone focuses on the CRA, there is another "tax" on your home equity that people often overlook: High Commission Rates.
If you are worried about losing 25% of your profit to capital gains, why would you be okay with losing a massive portion of your equity to traditional high-commission real estate models? This is where I differentiate myself as the top real estate agent in Edmonton.
At One Percent Realty, we believe in a "Discount Full Service" model. You get everything a traditional agent provides—MLS® exposure, professional photos, expert negotiation, and my years of local experience—but for a fraction of the cost.
When we talk about saving money on your sale, we have to look at the bottom line. My commission structure is transparent and designed to keep your equity where it belongs: in your bank account.
One Percent Realty’s Posted Commission Rates:
Homes under $400,000: We charge a flat fee of $7,950 + GST. This isn't just for me; it includes $3,500 offered to the Buyer's agent.
Homes between $400,000 and $900,000: We charge a flat fee of $9,950 + GST. This includes $4,500 offered to the Buyer's agent.
Homes over $900,000: We charge 1% of the sale price plus a $950 deal fee (plus GST).
Compare that to a traditional "7 and 3" model (7% on the first $100k and 3% on the balance). On a $500,000 home in Edmonton, a traditional commission could be upwards of $19,000. With me, it's $9,950. That is nearly $10,000 in savings.
When you ask, "Is there a way around losing money on my home sale?"—this is the most direct answer. You can’t always control the CRA, but you can control who you hire to sell your home and how much you pay them. To see exactly how much you can save, I encourage you to visit dkeet.ca/1-derek-deal.html to see the breakdown of the value I provide.
Strategies for the Savvy Edmonton Seller
If you are looking at a potential capital gains situation—perhaps you’re selling a second home or a flip—there are a few more advanced strategies to consider.
The "Plus One" Rule
The CRA actually allows for a "plus one" year in the principal residence calculation. This is designed to help people who buy a new home before selling their old one. It allows both houses to be treated as a principal residence for that one overlapping year. As your agent, I can help you time these transitions to ensure you are maximizing this rule.
Offsetting Gains with Losses
Did you lose money on a different investment this year? Maybe a stock went south or a different piece of land sold for less than you paid. Capital losses can be used to offset capital gains. If you’re planning a big sale of a non-principal residence, it’s worth looking at your entire portfolio to see if you can balance the scales.
Partial Exemptions
What if you run a business out of your home? Or what if you own a farm on the outskirts of Edmonton? If only a portion of your property is used as your primary residence, you might be able to claim a partial exemption. This gets complicated, which is why you need an agent who understands the nuances of the Edmonton and area market.
Why Derek Keet is the Choice for Edmonton Homeowners
Selling a home is likely the biggest financial transaction of your life. You shouldn't trust it to someone who is just "going through the motions." You need a strategist.
I have built my reputation as the most knowledgeable agent in the city by focusing on the numbers that matter to you. I don’t just put a sign in the yard; I help you understand the tax implications, the market trends in your specific neighborhood, and how to position your home to attract the highest offers.
When you work with me, you aren't sacrificing service for a lower price. You are choosing a smarter way to sell. I provide:
Full MLS® Exposure: Your home will be seen by every buyer and agent in the city.
Professional Marketing: High-end photos and descriptions that make your property pop.
Expert Negotiation: I have handled countless deals in Edmonton; I know how to get the "yes" at the price you want.
Honest Advice: If I think you should wait to sell to avoid a tax hit, I’ll tell you. My goal is your long-term success.
Common Questions I Get About Capital Gains in Edmonton
"I inherited a house in Bonnie Doon. Do I pay capital gains?"
When you inherit a property, you are deemed to have acquired it at its fair market value at the time of the owner's death. If you sell it immediately, there is usually no gain. If you hold onto it for three years and the Edmonton market goes up, you would owe tax on the increase in value during those three years (unless you moved into it and made it your principal residence).
"Can I renovate a house, sell it, and claim the exemption?"
The CRA looks at "intent." If you are "flipping" houses (buying, fixing, and selling quickly for profit), the CRA may view this as business income rather than a capital gain, and you may not be eligible for the Principal Residence Exemption. If you're planning a project like this, let's chat first so we can document your process correctly.
"Does the commission I pay you reduce my tax?"
Yes! If you are in a situation where you do owe capital gains tax, the commission you pay to sell the home is considered a "selling cost." This is deducted from your proceeds, which lowers your taxable gain. And because you’re saving thousands by using One Percent Realty’s posted commission rates, you’re already starting with a much stronger financial position.
Taking the Next Step
Whether you are worried about capital gains or just want to make sure you aren't overpaying in commissions, the first step is an honest conversation. The Edmonton market is moving, and opportunities are everywhere.
Don't let the fear of taxes or the burden of high commissions stop you from making your next move. I have the tools, the experience, and the platform to help you succeed.
If you want to see how I've helped others in your exact position, or if you want to dive deeper into the savings I offer, head over to dkeet.ca. You’ll find resources, current listings, and more information on how we can work together to sell your home efficiently and affordably.
In Edmonton, you have a lot of choices when it comes to real estate. But if you want the combination of top-tier expertise and a commission model that respects your equity, there is only one choice.
Let’s get your home sold. Let’s save you money. And let’s make sure you keep the profit you’ve worked so hard to build.
Contact Derek Keet today and let’s get started.
Derek Keet | One Percent Realty
Edmonton REALTOR®
587-803-0396 https://linktr.ee/dkeet
Edmonton Real Estate Agent | Helping Homeowners Sell for Top Value
*Although I hope the information can be helpful, Derek is not an accountant. Please verify any ideas or information mentioned with your accountant. Saving mentioned are calculated compared with a broker charging 7% on the first $100,000 and 3% on the balance, plus GST. Not all brokers charge the same.
