Accounts & Tax · OAS Clawback
Capital gains and the OAS clawback
A single big sale — a cottage, a rental, a large stock position — can quietly claw back your Old Age Security. The taxable half of the gain lands in your income, and that's exactly what the OAS recovery tax measures. This guide shows how the two interact and gives you a calculator to see how much OAS a gain would cost you.
The short answer
- The linkThe taxable half of a gain adds to your net income
- The triggerIncome over $95,323 (2026) starts the OAS recovery tax
- The cost15¢ of OAS repaid per dollar above the threshold
- The fixSpread or time the sale to keep any one year's income lower
Capital gain → OAS clawback calculator
Enter the capital gain you're considering, your other income before the gain, and the OAS you receive. The calculator adds the taxable half to your income and shows how much OAS the gain claws back.Enter the capital gain you're thinking of realizing, your other taxable income before that gain, and the annual OAS you receive. The calculator adds the gain's taxable half to your income, applies the 2026 threshold and 15% recovery rate, and shows how much OAS you'd lose — with and without the sale.
Your numbers
2026: 50% inclusion rate, clawback over $95,323 at 15%.
OAS you keep without vs with the gain
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How the clawback is figured
Why a capital gain can claw back your OAS
The mechanism — the taxable half of a gain is added to net income, and net income is the figure the OAS recovery tax is measured against.The OAS clawbackOfficially the OAS recovery tax: above an income threshold ($95,323 in 2026), you repay 15 cents of Old Age Security for every dollar of net income over the line. — officially the OAS recovery tax — isn't triggered by your wealth or your spending. It's triggered by one number on your tax return: your net incomeLine 23400 on your return — total income minus certain deductions. The taxable half of a capital gain is part of this figure, which is what the clawback uses.. When that number climbs above the threshold, the government starts recovering your Old Age Security.
Here's where capital gains come in. When you sell an asset at a profit, only 50% of the gain is taxable — but that taxable half is added straight to your net income. So a $200,000 gain on a cottage adds $100,000 to your income for the year. If you were comfortably below the threshold before, that one sale can push you well above it, and your OAS gets clawed back as a result. The rest of your finances haven't changed; a single dispositionThe tax word for selling or otherwise giving up an asset — a sale, a transfer, or a gift. A disposition at a profit is what creates a capital gain. did all the damage.
This is the trap that surprises retirees most. The principal residence you live in is exempt, so selling it is fine. It's the second property — the cottage, the rental, the investment condo — and large taxable-account stock sales that create the taxable gain that feeds the clawback.
New to the OAS clawback? Start here
A pointer to the dedicated OAS clawback guide, which covers thresholds, what income counts, the avoidance strategies, and how couples are treated.This page focuses narrowly on capital gains as a trigger for the clawback. If you want the full picture of how the OAS recovery tax works — the exact thresholds by year, every type of income that counts, the seven main ways to reduce it, and how couples are treated — read the dedicated guide first, then come back here to model your sale:
The complete OAS clawback guide
Thresholds, what income counts, seven avoidance strategies, and how couples are affected — the full mechanics in one place.
Timing a large gain to protect your OAS
Strategies specific to capital gains — spreading a disposition across years, harvesting losses, realizing before OAS starts, and the in-kind donation option.Because the clawback is calculated year by year, when you realize a gain matters as much as how big it is. A few capital-gains-specific moves keep more of your OAS:
- Spread the disposition. Selling a large stock position over two or three calendar years keeps each year's taxable gain — and your income — lower. A property sold in one shot can't be spread, but a portfolio of stocks and ETFs can.
- Realize before OAS begins. If you're 64 and sitting on a big gain, triggering it before your OAS starts means there's no benefit to claw back that year.
- Harvest capital losses. Selling losing positions in the same year offsets the gain dollar-for-dollar, shrinking the taxable half that reaches your income. See tax-loss harvesting.
- Donate securities in-kind. Gifting appreciated shares directly to a charity eliminates the capital gain entirely — so nothing is added to your income and nothing claws back your OAS. See donating securities.
- Use the principal residence exemption. On a property you've lived in, designating it correctly can wipe out the taxable gain. See capital gains on real estate.
- Shelter going forward. Gains inside a TFSA never count as income, so they can't claw back OAS. Shifting taxable holdings into registered accounts over time reduces future exposure.
The calculator above lets you test these ideas: cut the gain in half to simulate spreading it across two years, or drop it to zero to see your OAS restored. For the underlying mechanics of capital gains themselves, see our capital gains tax explained guide.
A worked example
A concrete walk-through of a cottage sale showing how the taxable half pushes income over the threshold and how much OAS is recovered.Suppose you're 68, with $70,000 of net income from pensions and a RRIF, and you receive the full OAS of about $8,917 for the year. You're well under the $95,323 threshold, so none of your OAS is clawed back. Then you sell the family cottage for a $200,000 gain.
- The taxable half of the gain is $100,000.
- Your net income jumps to $170,000 for the year.
- That's $74,677 over the threshold. At 15%, the recovery tax is about $11,202 — more than your entire OAS, so the full $8,917 is clawed back.
Had you instead spread the sale or offset it with losses to keep the taxable gain smaller, you'd have kept more — or all — of your OAS. That's the whole point of modelling the sale before you sign. Note the clawback is based on the prior year's income and is recovered through reduced OAS payments in the following July-to-June period.
Frequently asked questions
Quick answers on how capital gains feed the OAS clawback — how much counts, the threshold, and how to avoid it.Does a capital gain affect the OAS clawback?
Yes. The taxable half of a capital gain is added to your net income, and net income is exactly what the OAS clawback (officially the OAS recovery tax) is measured against. So a large gain — from selling a cottage, rental, or a big position of stock — can push your income over the threshold and claw back some or all of your Old Age Security for the following year, even though the rest of your income hasn't changed.
How much of a capital gain counts toward the OAS clawback?
Only the taxable half. Because the inclusion rate is 50%, a $100,000 capital gain adds $50,000 to your net income. It is that $50,000 — not the full $100,000 — that gets compared to the clawback threshold of $95,323 for 2026. Still, a $50,000 bump is more than enough to claw back a meaningful amount of OAS for most retirees.
What is the OAS clawback threshold for 2026?
For 2026 the OAS recovery tax begins once your net income exceeds about $95,323. Above that line you repay 15 cents of OAS for every dollar of income over the threshold. Once your income is high enough, the entire OAS benefit is recovered. The taxable portion of a capital gain counts toward this income, which is why timing a large sale matters.
How can I avoid the OAS clawback when selling an asset?
The main lever is timing and spreading. Realizing a large gain all in one year is what triggers the clawback; spreading dispositions across calendar years keeps each year's income lower. Other moves include offsetting the gain with capital losses, using the principal residence exemption on a property, donating appreciated securities in-kind (which removes the gain entirely), and holding investments inside a TFSA where gains never count as income. Our OAS clawback guide covers the full set of strategies.
Does selling my principal residence trigger the OAS clawback?
Generally no. The gain on your principal residence is exempt, so there is no taxable amount to add to your income and nothing to claw back your OAS. The risk comes from selling a second property — a cottage, rental, or investment property — where the gain is taxable. That is the sale to plan carefully around if you receive OAS.
This guide and calculator are for educational purposes only and are not financial or tax advice. The calculator uses a simplified model: it adds 50% of the capital gain to the other income you enter, compares the total to the 2026 threshold of $95,323, and applies the 15% recovery rate up to the OAS you receive. It does not model provincial tax, the income tax on the gain itself, the July-to-June OAS payment period, or other income changes. Figures reflect 2026 rules. Confirm the current rules and your own situation with the CRA or a qualified tax professional before acting.