Due to the brittle nature of wood material, the dissipation of seismic energy in timber structures is typically ensured through yielding of the mechanical connectors, where plastic deformations are developed in fasteners that have adequate ductility and cycle-fatigue strength. These structural components are denoted dissipative zones, whereas all other structural elements are assumed to behave elastically. Such elements are designated as non-dissipative zones and are designed with sufficient over-strength, to meet the requirements of capacity-based design (CD). Despite the general consensus that using the principle of CD could lead to safe buildings, where brittle failures are avoided, the applicability of such approach to light frame timber (LFT) and cross laminated timber (CLT) buildings has lacked analytical expressions that depend on the structural typology and failure mechanism. The current paper aims to fill this gap in knowledge by proposing an analytical approach that incorporates the CD philosophy to LFT and CLT buildings at the substructure (wall) and super-structure (building) levels. A simplified approach is adopted for structures with a low-to-medium energy dissipation capacity whereas a more rigorous approach is presented for structure with a high energy dissipation capacity. An experimental comparison and design example is included to present the applicability of the proposal.