Entries posted April 2021

Capital Gains Tax on a Principal Residence ?

The Globe and Mail published an article on March 20, 2021 putting back the idea of Capital Gains Tax on a Principal Residence. The idea behind is obviously that home owners are making too much money, with a market that across the country is up 25% from a year ago. In other words, if there are not enough homes to accommodate the population, it is because of the home owners are driving prices up. In 2017, it was the foreigners! So, the easy way, for some, is to say that it is the responsibility of Canadians! Let me tell you something very simple, if a home buyer has the choice between 5 homes…do you really thing that the seller will be able to push prices up. Finding together solutions including investors, home owners, tenants and the government. A good leader should start the conversation and listen to everyone including professionals. What is at steak? • Currently, the sale of a principal residence is exempt from capital gains tax. For most in Canada, it is retirement planning. • the United States is often used as an example. There, you are exempt from tax on the first $500,000 USD as a couple, and $250,000 USD as an individual, of capital gains. But what is often not mentioned is that the interest paid on mortgages is tax deductible in the U.S. This important distinction has not been part of the discussion in Canada. Homeowners already pay • Land transfer taxes (Ontario +Toronto, if applicable), and • property taxes. Adding capital gains tax wouldn’t be solving the problem, and will certainly not be a way to cool housing markets as the Non-Resident Speculation Tax didn’t.

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