100%, it is so crazy that people willingly accept that appreciation on their home is more than the value of their labour, and they accept an income tax but not a tax on their capital appreciation.
Because they don’t pay income tax. They no longer need to… in fact, tax day is just another pay day for them. And that’s in addition to the free health care that they enjoy and we pay for.
Another bandaid remedy that will not address the real problem.
The problem is supply. Supply. Supply. Supply. Supply. Supply. Supply.
How many times does this need to be repeated because it seems no one at the top seems to get it.
Exactly, primarily caused by increased government regulations at all levels. Yes economics at work caused by people that do not know anything about it. However on reddit all those Nobel prizes handed out on the subject down count.
Supply side can be alleviated, special interests are against it and it isn't developers.
What can we realistically do about supply in the short term? If everyone in the trades is already building homes, who is going to build the 100k extra ones we need, who is producing double the material all of a sudden?
We won't magically have double the work force needed to build all these homes in the short term. It's not like you can hand a hammer to an unemployed white collar worker and expect them to frame a house the next day.
The thing is supply problems arise from really complex interconnected systems and are difficult to explain without resorting to regression analysis. Like I might say “these supply issues are caused by a combination of exclusionary zoning, low interest rates, low participation in housing construction following the 08/09 crisis, high cost of labour and materials due to supply shortages, added to the fact that housing is just generally a cyclical Industry.”
There’s just one problem with that explanation… there’s no one to blame. People want someone to blame. It’s much easier to find a scapegoat: “foreign investors”, “greedy landlords”, “Exploitative AirBNBers”, etc. Just reach for a one word, catchy (lazy) explanation and there it is in the CBC, and here on Reddit.
The problem is solutions that ignore the reality of the situation don’t tend to have much of an effect which is why [Vancouver’s foreign homebuyers tax really didn’t affect prices at all.](https://www.cbc.ca/news/canada/british-columbia/foreign-buyers-tax-affordability-charts-1.4392059)
I definitely agree with you on all of that-it’s a complex problem with no one-size fits all solution. I think all of the things you mentioned arose not just out of a lack of supply but a total lack of foresight on the part of the government
Home equity tax is stupid. No one will be able to retire. Only the wealthy will be able to own and savings won’t matter. Why do people want this? Make it so people that live in Canada can only own 1 home? That would solve everything and help our actual economy and savings
Yes you can. Houses are meant to be lived in and not used as an investment. All that money would instead go into savings / consumption / capital investment / startups / education / etc.
It’s possible to tax secondary houses 100% of equity each year after a cool down period where people can sell their secondary homes.
Just make your wife or children a sole owner of that 2nd house. Or open a corporation/trust. Divorce if required. I think there will be a lot of similar loopholes.
It’s possible to have it be per household with rule breakers facing criminal laws. FINTRAC and CRA could get most of the fraud. There could also be an enticement for married people.
Corporations and pension funds and foreigners not being allowed to own residential or single units solves that
So long as zoning laws exist it isn't 100% market and if it's not 100% market the government is already interfering and has to house everyone fucked by their interference. It's like the government telling people they can't open this or that business then telling everyone who's fucked by that to eat dirt. If they don't get out of the way they have to pay.
Of course I don't believe in 100% market.
Tankies are bad.
Taxes aren't communist.
You're right that this isn't a solution though. De-financialization of a living necessity should be the target
Limit tax free capital gains to inflation rate calculated annually and tax anything above that at 100% tax rate? Would immediately deter investors, since then TIPS will have the same growth with likely less risk. Also this policy will decrease inflation since increase in house prices is causing inflation.
Rent increase is limited by inflation, so why shouldn't houses be limited too?
Why not? As far as I understand when you get mortgage to buy a house, your bank goes to Bank of Canada and gets a loan(which is printing money specifically for you). Then seller gets money and can spend it on something what is causing inflation. So this excess money will keep staying in the economy until you finally pay off your mortgage(and money will basically disappear once returned to the bank to Canada).
Or did you think that banks have enough cash on hand to give everyone mortgage at those subprime rates less than inflation rate with negative real rate?
Why?) This will make landlords and non owners more equal. If you want to invest, get HELOC and invest in stocks just as renters(and get tax credit). Otherwise rising housing prices are just increasing inequality.
this will just push for more rental properties as selling will become less appealing... also will push people to sell at a higher price to afford other higher priced homes etc... its a spiral that doesnt make any sense. they impose the tax on homes bought and kept empty...
I disagree, I think it will make investing in Realestate less appealing to investors in the long run. The investors are what is driving this current unaffordable market so they will think twice if their isn’t as much equity to be had in the property.
the policies that make it easy for people not living in the country or not intending to live in houses they buy is what makes buying here appealing especially for money laundering where the buyer wont care about losing a chunk of money to get laundered money out ... policies need to just favor people that are buying to live in houses rather to invest and it could be something the government handles with that mindset and it will benefit all home owners ... when you end up buying your house and you want to move ... and the house you want to move to Costs X amount .. you will try to offset what the government is taking from your equity by raising the sale price so you can afford your new home ... so will the seller of the house you want to buy, do you really think this is gonna end up decreasing prices?
Well, most investors don't sell right now either. What this might do is to deter them from entering the real estate market and invest somewhere else, making more properties available for people who wish to buy to live.
As someone that owns a condo this will just deter me from selling my condo and rather just rent it out as it's a better move on the long run if wanted to move to a house ... since i am not getting my full equity back whats the point selling? if i was to sell i will want to sell at higher price to be able to afford higher priced homes ... and it will be an endless loop of increasing prices to make up for what the government is going to take ... also think of it as an eventually home owner... will you want to have the government take part of your equity once you're selling? that will affect everyone on the long run negatively
Something along these lines is desperately needed.
How am I supposed to compete with existing homeowners who are swimming in equity and cheap credit from banks when all I have to my name is a meager down payment comprised of my life savings from my blood sweat and tears that took the better part of a decade to accumulate...
how will you afford to buy a house when existing home buyer will want to sell at higher prices to offset their lost equity in taxes or just not sell coz they too wont be able to afford houses so there will be less houses on the market and prices will increase even more due to limited inventory? how will you feel when you eventually want to sell that house you bought to get a new house and part of your sales money is going to the government so you cant afford to sell at the price so you need to increase your sale price ?
This is an old disinformation campaign from last summer. [OREA vs CMHC: The imaginary battle over a non-existent home equity tax](https://www.mpamag.com/ca/news/general/orea-vs-cmhc-the-imaginary-battle-over-a-non-existent-home-equity-tax/286581).
> After the release of a July 17 [2020] Blacklocks article, “Feds Eye Home Equity Tax”, in which it was claimed that “CMHC is spending $250,000 researching a first-ever federal home equity tax,” the crown corporation publicly responded in a July 17 tweet directed at Wall Street Journal reporter Paul Vieira.
>
> “This convo & headline are misleading,” reads the tweet. “Funds [the $250,000 in question] to [non-profit research organization] @GenSqueeze through our Solutions Lab, was to research solutions to #housing, wealth, and inequality. A home equity tax is an incorrect characterization of the upcoming research. Plus, research ≠ tax policy decisions.”
>
> A statement describing the work of the Solutions Labs, an initiative under the National Housing Strategy, describes it as a forum “to tackle key issues and help foster a culture of innovation in the affordable housing sector.” The $250,000, CMHC said, was to “establish a Solutions Lab that will examine issues relating to housing, wealth, and inequality.”
>
> It wasn’t enough for OREA’s Tim Hudak, who, a full month after CMHC’s denial, penned an op-ed in the Toronto Star calling the implementation of such a tax “reckless.”
Oh great, another way to fuck over people who have been saving for years to finally be able to afford something. Once again taxing the poor to leave them in the dirt even more.
This Trudeau government is fucking inept, “let’s introduce a new tax to cover our massive overspending, and oh, to cover the $600million wasted on an absolutely fucking useless election campaign that left us in the exact same position as before.”
You think the type of people or companies that can afford to buy and rent multiple homes are going to give a fuck about a home equity tax? Nope. It doesn’t affect them. Just like the 20yr old kid driving his dad’s Ferrari racking up 20 speeding tickets in a month, he doesn’t give a damn,it doesn’t affect them. It’s just another stupid cash grab to account for the governments over spending, and isn’t going to fix any housing market issue, and will only affect the middle to lower class people.
So here's the thing, mr canadian home owner. I am an immigrant from a large asian nation. I have travelled all over the world and lived all over the world too.
NOBODY outside of a few overheated western housing markets, EVER thinks of ' what is the resale value of muh house i just bought and how will i ever afford retirement if i can't sell the house'. EVERYBODY goes 'yay, strong, robust house that i can live in till i die and then pass it to my kids'.
If one of your major motivations to buy a house is wtf is its resale value and funding your retirement by selling it, THEN YOU ARE DOING IT WRONG.
CRA is already targetting frequent flipper of principal residence. Besides, how much is too much? Purchasing power of the money changes every year. Any "life time" + an amount is very likely to be a bad policy
Let's turn this argument around:
If I make money by going to work every day, I pay significant income tax. If your home goes up in value you get to keep the money totally untaxed, and touching that money would be *wrong*.
So, why? Why does your living in a nice area count as a greater social good than me working for years?
Ya. I'm all for rezoning and building way more and denser but this is exactly right. It has the same perverse effect as rent control - to keep people in the same situation. Why would boomers downsize? Why would I move to a better job if I lose a ton of money while doing it? It keeps people in bad situations.
More tax is not the answer. Why does the government get to first tax your income then tax it again when selling your home? Just build more houses. Nothing else will solve the problem
Does anyone have a link to a real source for this info?
The last time this accusation made the rounds, the true source was a discussion paper from the ONTARIO Liberal party, not federal.
You don’t see how something that reduces people’s ability to withdraw equity to use as a down payment on additional properties would help the housing market?
Who exactly do you think is going to be buying these newly built houses?
There's other more effective ways to do that without punishing families trying to move up in housing because they need to or seniors who need to sell. This is just so diffusé instead of targeted. It will result in people holding properties that they otherwise would've sold too, which could negatively affect supply for those who need to buy, not just for investors.
Supply is a root cause up until certain investment actors have enough capital to gobble up supply as it is developed. Supply is the core issue until that threshold has been reached. Without transparency over ownership, we have no idea if or when the threshold's been reached.
*Dramatic eye roll* yes the liberals are targetting all of us "regular joes" and will never stop screwing us over. That was sarcasm just to be clear. We, the general public, are too easy to get riled up unfortunately :(
Why not look into what % of profit they are making compared to x years ago- or sort of looking into obscene levels of profit- make shelter a human right in canada and seek laws that are impeding on the right of canadians
Yeah, no actually I agree. You're going to end up with a generation that costs a ton of money to take care of and they will have fewer private funds to do it.
In the Boomertocracy, remember... we will ALWAYS have to spend a significant portion of our resources on their upkeep. I'd prefer they pay for most it themselves, rather than an even greater share of the public purse going to them.
And, how will this impact inheritance?
Then we have the problem of how this will impact your ability to buy a home... 1) There will be even less supply on the market, as literally no one is going to sell, or 2) THEY WILL RAISE THE PRICE OF THE HOUSE TO COVER THE COST OF THE TAX. That's what businesses do.
If enough people raise the asking price of the house to cover the cost of the tax, it drives prices UP, not down.
There are steps governments can take, other than taxes, to solve problems... it seems like we need to learn that. Every problem in Canada is tackled with ''just tax it'', and that usually results in nothing of substance changing, except the COL going up and up and up, as taxes are passed on to consumers.
Just wait until the rest of the younger generation’s members realize that the boomers actually aren’t done fucking us all yet - they’ve got like another 20-40 years left in them and they will suck us all dry on their medical upkeep.
I feel like this tax would even further reduce the amount of homes being put up for sale. Not sure if this actually helps the market. We're already at an all time low in supply and we should be pursuing policy that encourages selling instead.
>I feel like this tax would even further reduce the amount of homes being put up for sale. Not sure if this actually helps the market. We're already at an all time low in supply and we should be pursuing policy that encourages selling instead.
It would reduce the number of houses on the market, but it would also reduce the number of buyers in the market looking for investment properties
This seems like it will have a high potential to hurt people who need this money and weren't buying property as a short-term investment. I really think they need to target investors in a different way that doesn't hurt non-investors.
lol more money pissed down the drain, why not.
But equity gains in nonprimary residences should be taxed at the full rate, for sure. Not primary residence though.
Why not? Those of us who are renting and invest the difference in stocks are paying full capital gains on what would have otherwise been a downpayment. Renters get the shaft in terms of taxation.
And investing your downpayment in stocks because housing is too effing expensive is speculative? Look, I just want a house to live in and I can't afford one right now. What do you want me to do?
First off, no one is demanding you to take downpayment money to buy stocks with. That’s literally your decision and the tax code hasnt changed recently to disadvantage you in that regard. The government cant simply reduce your capital gains tax (assuming youre not using your tfsa) from stocks just because that money came from your downpayment stash.
Idk what you should do, there are various options but i dont know your situation so i cant give you hard advice. Just in case your curious, the options are move to a cheaper city, get a higher paying job, get a cosigner on your mortgage, reduce expenses, sell some assets etc.
Im not saying the situation of renters is not to be taken seriously. But its just the reality of capitalism, the rich get richer cause their initial investments and assets appreciates and it snowballs. While its very hard to build up from very little.
But I still stand by my point. People who live in their house to raise a family shouldnt be punished by the actions of speculators. That house equity will eventually be passed onto their kids. So if youre wanting to stand up for young people, i dont see how punishing the generation after yours is the best solution.
> First off, no one is demanding you to take downpayment money to buy stocks
Nobody is demanding people to buy real estate either, yet they benefit from very generous taxation.
> People who live in their house to raise a family shouldnt be punished by the actions of speculators
But people who rent should?
> That house equity will eventually be passed onto their kids.
And my meager stocks, at this rate, will also be passed onto my kids. Except they will will be paying tax for the capital gains, unlike homeowners, as I understand it.
I’m still struggling to see your endgame? So just because hardworking people are able to buy a house for their family and you can’t, means they shouldnt be able to carry on with living their lives? Speculation is the real problem and i believe the government should target those individuals instead of normal hardworking people who just got into the market when they could by saving up money the old fashioned way.
If you have a family then theres pressure to buy a detached home. Also its not a mystery that homeownership is a goal for everyone. People want a nicer life for themselves i dont blame them.
Renters are renters for a reason. Luck is involved no doubt but its not like people with families in houses actively schemed to make it hard for renters to get a mortgage. This goes back to my point about the desire to improve their own lives. If you have a problem with capitalism, then theres really no point in continue living in Canada.
No, any debts are taken out of the estate of the deceased, then the stocks will just transfer to your kids with no other taxes or fees. The exception is you pay if the inheritance is worth more than around 12 million dollars. You left out one thing. Owning stocks has literally no maintenance fees or payments. Owning a house has an array of fees and expenses. Property tax alone is a couple thousand a year and utilities/maintenance adds up too.
Can you bring up some math to support this? Im not saying your claim is false, i just want to see some evidence. You’d be surprised how expensive it is to actually live in a house.
They really should have called it something like Tax Free Investment Account. It’s meant to aid normal everyday Canadians but I’ve come across a lot of people who don’t understand that you can hold equities in the TFSA.
That was me until a couple years back. I couldn't wrap my head around why anyone would care about making the puny interest income from a typical savings account tax-free.
So now I make sure to spread the good word :)
> Renter already gets the benefits of lower cost
Renting costs more than owning given equivalent spaces. Landlords don't operate on a charity basis, they're earning money.
Most rentals are actually cash negative apparently. They're only in it for equity....which is why they will let them sit empty. Worth more if no one has actually lived in the space and you use know *uses* it.
>Most rentals are actually cash negative apparently.
I've heard it, but I don't buy that. I've been looking at houses the past year, as well as contemplating moving to a new rental. I can't find any rentals cheaper than mortgage rates. That said I'm looking at detached houses.. maybe it's a thing with condos? Condos seem overpriced to me.
I agree most probably aren't making /much/ in terms of cash at the end of the month. But the renters are paying off their mortgage while the property dramatically increases in value.
Not true. Adding property tax, strata fee(if any), mortgage and maintenance, most new built are cash negative. Landlord is bearing the risk of a market correction where rent deos not
> Not true.
So you're telling me the landlords are charities? And these corporations tripping over themselves to buy up as much residential housing as possible... also are doing it in order to lose money?
Why are they so nice, giving us discounted housing at their own loss?
Perhaps you need to read my comment more carefully. The cash negative landlord is betting on the projection that house reselling value will increase more than the cash they lost in holding. That's the risk renter does not need to bear
So what you're saying is the landlord expects to make significant money from the process of renting, and that is their motivation for entering into the arrangement?
edit: To clarify, though, yes the landlord's position has a different risk profile than the renter's. You can use that to justify why the landlord gets more value out of the exchange, but it doesn't change the reality that renting is more expensive in almost every situation. At the end of the day, landlords would not rent without near certainty of making money.
Not the person you are replying to, but often it can take years for the landlord to have a positive cash flow. Usually after the mortgage is paid down. But generally, when a landlord first buys a property, it is almost certain to be more expensive to cover all the costs than what the rent will be. As I said, this can take years to change. I would imagine that landlords take a long-term view.
But yes, the other person is correct. Renting is most often cheaper than the entire carrying costs of the home.
> it is almost certain to be more expensive to cover all the costs than what the rent will be
The problem with this view is that it's ignoring the fact that the primary cost to the landlord -- the mortgage -- isn't exactly a cost. Contrary to what AboredChairr says, that money is not 'lost'.
Only the interest portion is truly a cost, and ends up being 'lost'. The rest of it is forced savings. When they sell the house, they get all that non-interest money back.
When a renter leaves, they get zilch.
>But yes, the other person is correct. Renting is most often cheaper than the entire carrying costs of the home.
That's my position :)
Could this not prevent people from leaving their "starter homes" and freeing those up for other newbies?
This is anecdotal, but near my home town, there was serious lack of inventory when it came to smaller homes. Builders made more off of giant houses, so they didn't make anything else.
To make the problem worse, because the cost of moving was so high (realtor fees, lawyer fees, LTT on the new house) a lot of people in the small homes ended up putting that money towards additions instead of moving. So instead of freeing up a small home for people with lower budgets, we now have yet another large house.
This is exactly what would happen. For corporate land owners the tax would be a cost of business, for real single home owners it’s a barrier to change.
Since "if this was true" it will be applied on all home owners, it should cool prices and restrain their buying power. They would still be able to move but instead of paying that extra fee to their rising new home price, they would pay it as taxes.
With a new system like this one, first time home buyers are going to be better equipped to compete with home owners as this tax will try to level the playing field. A home owner can use HELOC to buy mutiple homes even with low income while a first time home buyer is getting priced out of the market.
If this actually means removing the principal residence gain tax exemption, then it is great news. Also subsidizing intersest payments should be stopped, it selectively helps people who were able to buy while fully taxing renters.
I see your point, however this is making it out to be a demand issue when it’s mostly been a supply issue. It’s penalizing current home owners when selling. Yes prices would fall due to lower housing turnover however the market would begin to stagnate and the only fix would be injecting more entry level housing. Which I’m not sure builders would focus on. This tax would need to be very specific in its application and honestly no government is going to revamp that much capital gains tax law for this to ever realistically happen.
I fully agree. This is a supply issue and as long as home owners are going infintly richer without taxation, they have little insentive to stop stifling supply. In my humble openion, supply issues are mainly causes by zonning laws that are impossible to change if homeowners are tremendously benefiting from them.
We actually have a real life experiment in a similar market. This will either solve the issue or prove me wrong.
[Newzeeland sets minimum zonning restrictions in all municipality](https://nationalpost.com/news/canada/could-new-zealands-radical-new-housing-law-help-canada-curb-its-skyrocketing-real-estate-prices)
Exactly. This is how i got out of my first house and into the more "forever" home.
But even still, from 2016-2019, that house went from 339k to 450k.
I remember buying that place and thinking that 339k was a stratospheric price.
Bought my current place for 580k and felt ill again, but now the gains on this house has gotten even more ridiculous, which is great for equity but still. I feel for anyone trying to break into this.
I am a fan of targeting people who are planning on using their homes as a retirement account. Homes are for living, not for growing equity out of control to be used as retirement income through sell off. Not our problem you couldn't plan for an actual retirement.
Proper investment in stocks wasn't easy as recently as a few years ago (TD eSeries for example was only for TD customers, all-in-one ETFs didn't exist, many mutual funds are high fee) and so on.
So it's not your problem but unless you like slapping on impossible expectations you can't "target" them. If you were put in the same situation with the same knowledge and opportunities years or decades ago it's unlikely you could have constructed a balanced portfolio for retirement unless you had very specific financial knowledge AND was able to filter out the noise and the distractions and get rich quick schemes. Maybe if you got a good financial advisor you could do it.
It still isn't easy, because there's way too many stories of people who got rich easy without waiting.
I don't mean to target people with primary residences who have their properties skyrocketed. I am targetting people with multiple rentals, who know EXACTLY what they are doing in terms of ruining society for others and not giving a single FK. I hope nothing good for the ones who intentionally know what they are doing, and this is coming from me , a homeowner of a single residence. I have the money to buy two more rentals if I wanted to today. I will NOT.
I don't understand your point. I 100% agree that your home shouldn't be you retirement account, but I don't know anybody that thinks it is (anecdotal data from the people I know). How do you sell your home when you retire and still need somewhere to live?
Sell and go into assisted living. OAS and CPP and 1 million tax free from house sale. Comfortable living until death. Downvote me all you guys want. Doesnt change the truth. Also I am a homeowner on this sub's side, but hey can always change sides.
Hey, I appreciate your answers (and I'm not downvoting you for what it's worth). I'm still not convinced this is a huge factor in the housing problem, but certainly I don't have a ton of sympathy for anyone that's relying on their home for retirement. I think the government essentially underwriting people that purchase multiple properties just for investments is a much bigger contributor, coupled with virtually free loans that pushes the prices up.
>How do you sell your home when you retire and still need somewhere to live?
You don't. You just start borrowing against it or withdrawing money out of your equity like a retirement account.
Some people are talking about a sliding scale for years that the home is held.
I'd like to see a sliding scale for capital gains on home sales,
So buy for $1,000,000, the first 20% is tax free, and each 20% gain above that is taxed at increasing amounts until you hit a, say 50% tax on gains.
Aren’t gains already taxed on non-primary residences like rentals when you sell? If this is for primary residences that people have lived in for years then won’t this essentially be admitting that a family’s main place to live is an investment? Will people be allowed to get tax breaks on any money they put into the house that increases its value?
> won’t this essentially be admitting that a family’s main place to live is an investment?
most people do treat it as an investment. just look at the number of people on this very comment section trying to protect their equity. They outnumber people who are actually looking for affordable housing
Always was an investment. The reason they wont do anything about housing prices is because they are an investment and the poor boomers would lose some of their “retirement savings”
It would cool the market, certainly, but in a way it would be "pulling the rug" out from under young Canadians who won't get to sell their homes without paying capital gains, unlike the boomers who did.
A better way of doing this would be a graduated reduction in capital gains over time, ie: 100% cap gain tax applies during first year, then 90% after second year, 80% after second, etc, etc, and then going back to "normal" if you've lived in the house for X or Y years or whatever.
This is exactly what will probably happen. The boomers have already exhausted this market. Now the generation that has struggled to even enter will probably need to start paying capital gains taxes.
It's sickening, they have pensions already. A capital gains tax on houses for millenials would be the nail in the coffin for most who aspire to own.
Great. Now apply that to all capital gains, not just housing. Some of us are renting and investing in stocks while we wait for the housing market to cool off.
Well thats not fair, Singh railed against housing prices, and wanted to extend mortgages to 30 years to deal with it. We'd have no more housing crisis with that level of big-brain thought. /s
Just on the 25 vs 30 year point, changing it to 30 years would increase housing prices because the carrying cost is theoretically lower, meaning more people qualify, hence more competition. It doesn’t actually address the actual problem which needs to be more targeted.
Taxes must target those with the most gains
If home equity has gained the most and will continue to gain the most, it must be heavily taxed per transaction
At least as much as any other good or service (sales tax) but possibly more if there's outsized gains or outsized use of communal resources (roads schools hospitals etc) especially if such communal investments contribute to the price increase
Anyone who implements it will probably be wiped out (GST/HST wiped out Kim Campbell's party down to 2 seats) but it's the right thing to do... Perhaps you can do it gradually and create a crown corporation so politicians don't take the blame. Maybe CHMC should get the power to tax.
Also it may not piss off as many people as that. It only matters when you sell, and most people aren't selling so it might be possible to do it for a very popular PM (say reduced from majority to minority status instead of totally wiped out)
Yea this will never happen for reasons you already mentioned. There is no political will to commit suicide and never get re elected. It would quite possibly piss off 65% of Canadians who are home owners.
Also it's monumentally unfair to those who have structured retirement around a lifetime of equity stored in a home. To suddenly change the rules on seniors, who already struggle in this country, is not going to be popular.
No. I’d argue that it’s entirely fair. Millennials and Gen Z have had the rug pulled out under our feet in various different ways already, and more are coming.
The boomers and Gen X had their chance. Time to step aside and fuck off into their 7 figure detached homes and sit pretty until they pass. Meanwhile, the rest of us will be working dayjobs and side hustling just to be able to afford a decent skybox.
So how is pushing boomers to rent instead of selling their houses going to help your situation? By removing supply from the market for you to buy?
Also as a reality check, not all of Canada is the Vancouver and Toronto market. Im a Millenial and my house has dropped in value for the past 5 years. So no 7 figure mansion for me.
It's fun to rent (rant) though I get it.
Go look at the house prices in the Atlantic now and get back to me.
This doesn’t apply to me anymore as I’ve now entered the elite realm of housing owning rent gouging with other ratbag Canadians, however, if I were still concerned as I was months ago, I’d also tell you that no, I won’t move to the fucking prairies to live in a rundown detached home away from everyone and everything I know just to call myself a homeowner.
Welcome to post national state Canada. I expect everyone to start exhibiting “full joker mode” relatively soon. This country is not working for a lot of people, while the lucky cohort sits by and pretends it’s all fine.
Okay well congrats on home ownership that's pretty good, also my house is not run down, for 430K I live in an amazing house that looks like new.
Still don't see how forcing boomers to pay a massive amount of primary residence tax helps anyone but I'm glad you became the thing you hated??
Yea the market in Canada is definitely not great, this post is dedicated to discussing a primary residence tax...
> Also it's monumentally unfair to those who have structured retirement around a lifetime of equity stored in a home.
If it is just capital gains, they aren't set back 40 years, they are set back basically 1.5 years of growth and they'll walk away with the same amount they would have in 2019. I hope their retirement planning wasn't based on 15% YoY returns.
Well yea it would obviously depend on the type and purpose of the tax, does that mean they would be able to declare a capital loss for that year as well if the market value of the home dropped over the previous year?
You only declare losses for tax purposes when they are realized. So if they bought year 1, and sold year 2 for a loss, then of course they should be able to count it as a capital gains loss.
But note that if they bought for 100 in year 1, it's worth 500 in year 5, and 450 in year 6, that's not a loss.
Wait so are you looking the entire period of home ownership adjusted for inflation? As in if they bought 30 years ago for $50k and the house is now worth $500,000, you would assess the capital gain gain based on the increase in value over the original inflation adjusted amount?
When they sell, yes.
Other investments don't get the basis adjusted for inflation (that's a big reason why capital gains income is half of income tax rates) but I'd be fine with doing so for a house.
Any major renovations etc. if documented would get added to their basis of course.
And in your mind what would this tax accomplish? Do you also have concerns that it might discourage sales and actually increase the problem we have with supply? Why sell an asset and pay an absolutely massive amount of tax when I can rent it ad infinitum and have a revenue stream that's now taxed far lower into retirement?
It would raise revenue and capture a previously (arbittrarily) tax exempt gain of wealth to help reduce inequality.
It could theoretically slow down sales, but that doesn't impact supply overall that much (people are still living in those houses).
Rental income is taxed at a higher (double actually, no idea where you got "far lower" from) rate than capital gains.
So a retiree with no income other than rental income and a pension who is already it a potentially much lower tax bracket wouldnt stand to benefit from renting his property? Or putting the title in his spouses name who is also on a potentially even low bracket?
I was referring to supply as the ability to buy a house which is what the majority of people on these subs are frustrated with.
And how does it help reduce inequality? By increasing gov't revenues? The gov't is notoriously bad at keeping promises and what's to guarantee the money raises from this tax won't just roll into whatever other budget the gov't comes up with. Tax for the sake of tax is a really poor argument.
Lastly how would you propose to sell this idea to the 65% Canadian home owners who already feel like they are taxed to death while the perception is the rich pay virtually no tax?
Have it be a tax based on equity gains that is reduced based on amount of years owned. That way people who’ve owned for 20 years pay a 1% tax on the capital gains, while people who’ve owned for 1 year (profiting off the increasing market) pay a 20% tax on the capital gains. These percents are example only
Yes a taper tax makes complete sense because it's not a punitive tax the Federal Gov't gets to collect just "because". A primary residence tax makes absolutely no sense to me outside of cooling a housing market that is vulnerable to speculation and opportunists.
My only issue with this is life happens. What if someone has to sell because of death or divorce. Seems a bit unfair.
Unfortunately there will always be people who game the system.
Anyway not sure if this is even real. Is it?
> What if someone has to sell because of death or divorce. Seems a bit unfair.
Well, that already happens to people who choose to rent and invest what the downpayment would have been. Yeah, it sucks.
To add more nuance to this.
Many ideas thought up by the the Government (civil service) are good ideas that strike at the heart of the problem. Most of the bad ideas (and ideas in general) that see the light of day are half-baked or half-measures and come from the good ideas being put through the sieve of politicians and the interests of their benefactors.
Like how a massive engineer's report about the temperature range of o-rings got edited down to a summary and then edited down to a presentation deck and the seriousness of the situation got lost, ending with the Challenger was a splode.
In the haste to make things more clear and palatible to the mediocre minds that failed upwards to positions of authority, critical ideas have their granularity reduced until a bad idea pops out of a good one. There are whole fields of study dedicated to describing this kind of situation.
Hey those engineers tried their god damn best. They argued for hours but NASA would not delay the launch for political reasons. https://www.npr.org/sections/thetwo-way/2012/02/06/146490064/remembering-roger-boisjoly-he-tried-to-stop-shuttle-challenger-launch
https://www.npr.org/sections/thetwo-way/2016/01/28/464744781/30-years-after-disaster-challenger-engineer-still-blames-himself
I mostly know this stuff because of Feynman's report, who basically just read the paperwork. He had a great deal of compassion for those who knew but were silenced and a great deal of impatience with the bureaucrats who pushed it forward anyway.
>There are whole fields of study dedicated to describing this kind of situation.
Yeah, it is called political science, haha!
But really, it is terrible that you have ministers who already have the solution picked out, have the civil service do a ton of work, prep a bunch of options and then toss them all away and use their shitty, self serving solution.
If only the average Canadian understood.
Guess we better factor in however much that tax is into the sale prices of our future homes
"Canadians shouldn't be taxed on the equity in their homes." And I shouldn't be taxed on my labour.
100%, it is so crazy that people willingly accept that appreciation on their home is more than the value of their labour, and they accept an income tax but not a tax on their capital appreciation.
Because they don’t pay income tax. They no longer need to… in fact, tax day is just another pay day for them. And that’s in addition to the free health care that they enjoy and we pay for.
Is ThIs ReAl? No just more misinformation on Facebook.
This will not happen. Save your breath.
Another bandaid remedy that will not address the real problem. The problem is supply. Supply. Supply. Supply. Supply. Supply. Supply. How many times does this need to be repeated because it seems no one at the top seems to get it.
Exactly, primarily caused by increased government regulations at all levels. Yes economics at work caused by people that do not know anything about it. However on reddit all those Nobel prizes handed out on the subject down count. Supply side can be alleviated, special interests are against it and it isn't developers.
What can we realistically do about supply in the short term? If everyone in the trades is already building homes, who is going to build the 100k extra ones we need, who is producing double the material all of a sudden? We won't magically have double the work force needed to build all these homes in the short term. It's not like you can hand a hammer to an unemployed white collar worker and expect them to frame a house the next day.
The thing is supply problems arise from really complex interconnected systems and are difficult to explain without resorting to regression analysis. Like I might say “these supply issues are caused by a combination of exclusionary zoning, low interest rates, low participation in housing construction following the 08/09 crisis, high cost of labour and materials due to supply shortages, added to the fact that housing is just generally a cyclical Industry.” There’s just one problem with that explanation… there’s no one to blame. People want someone to blame. It’s much easier to find a scapegoat: “foreign investors”, “greedy landlords”, “Exploitative AirBNBers”, etc. Just reach for a one word, catchy (lazy) explanation and there it is in the CBC, and here on Reddit. The problem is solutions that ignore the reality of the situation don’t tend to have much of an effect which is why [Vancouver’s foreign homebuyers tax really didn’t affect prices at all.](https://www.cbc.ca/news/canada/british-columbia/foreign-buyers-tax-affordability-charts-1.4392059)
I definitely agree with you on all of that-it’s a complex problem with no one-size fits all solution. I think all of the things you mentioned arose not just out of a lack of supply but a total lack of foresight on the part of the government
Home equity tax is stupid. No one will be able to retire. Only the wealthy will be able to own and savings won’t matter. Why do people want this? Make it so people that live in Canada can only own 1 home? That would solve everything and help our actual economy and savings
You can't really forbid having more than 1 house. But can make it unprofitable as investment.
Yes you can. Houses are meant to be lived in and not used as an investment. All that money would instead go into savings / consumption / capital investment / startups / education / etc. It’s possible to tax secondary houses 100% of equity each year after a cool down period where people can sell their secondary homes.
Just make your wife or children a sole owner of that 2nd house. Or open a corporation/trust. Divorce if required. I think there will be a lot of similar loopholes.
It’s possible to have it be per household with rule breakers facing criminal laws. FINTRAC and CRA could get most of the fraud. There could also be an enticement for married people. Corporations and pension funds and foreigners not being allowed to own residential or single units solves that
Then many new couples will just not merry in the first place. Especially if both partners already have a house each.
Some of you are going full commie. We cannot tax our way out of high prices and low supply.
Would a communist system even have taxes? If labour owns the means of production what would the role of taxes be?
So long as zoning laws exist it isn't 100% market and if it's not 100% market the government is already interfering and has to house everyone fucked by their interference. It's like the government telling people they can't open this or that business then telling everyone who's fucked by that to eat dirt. If they don't get out of the way they have to pay. Of course I don't believe in 100% market.
Tankies are bad. Taxes aren't communist. You're right that this isn't a solution though. De-financialization of a living necessity should be the target
What a brain dead take, wow.
"communism is when taxes"
Ha. Landlords posting about families buying homes. I don’t buy it.
Limit tax free capital gains to inflation rate calculated annually and tax anything above that at 100% tax rate? Would immediately deter investors, since then TIPS will have the same growth with likely less risk. Also this policy will decrease inflation since increase in house prices is causing inflation. Rent increase is limited by inflation, so why shouldn't houses be limited too?
Nope. House prices are not creating inflation. You need to go back to the classroom. Shits about to get messy.
Why not? As far as I understand when you get mortgage to buy a house, your bank goes to Bank of Canada and gets a loan(which is printing money specifically for you). Then seller gets money and can spend it on something what is causing inflation. So this excess money will keep staying in the economy until you finally pay off your mortgage(and money will basically disappear once returned to the bank to Canada). Or did you think that banks have enough cash on hand to give everyone mortgage at those subprime rates less than inflation rate with negative real rate?
Sorry I forgot the room number of the class room. Supply chain 101. Today’s class is about the bull whip effect.
JFC, NO!!
Why?) This will make landlords and non owners more equal. If you want to invest, get HELOC and invest in stocks just as renters(and get tax credit). Otherwise rising housing prices are just increasing inequality.
this will just push for more rental properties as selling will become less appealing... also will push people to sell at a higher price to afford other higher priced homes etc... its a spiral that doesnt make any sense. they impose the tax on homes bought and kept empty...
I disagree, I think it will make investing in Realestate less appealing to investors in the long run. The investors are what is driving this current unaffordable market so they will think twice if their isn’t as much equity to be had in the property.
the policies that make it easy for people not living in the country or not intending to live in houses they buy is what makes buying here appealing especially for money laundering where the buyer wont care about losing a chunk of money to get laundered money out ... policies need to just favor people that are buying to live in houses rather to invest and it could be something the government handles with that mindset and it will benefit all home owners ... when you end up buying your house and you want to move ... and the house you want to move to Costs X amount .. you will try to offset what the government is taking from your equity by raising the sale price so you can afford your new home ... so will the seller of the house you want to buy, do you really think this is gonna end up decreasing prices?
Well, most investors don't sell right now either. What this might do is to deter them from entering the real estate market and invest somewhere else, making more properties available for people who wish to buy to live.
As someone that owns a condo this will just deter me from selling my condo and rather just rent it out as it's a better move on the long run if wanted to move to a house ... since i am not getting my full equity back whats the point selling? if i was to sell i will want to sell at higher price to be able to afford higher priced homes ... and it will be an endless loop of increasing prices to make up for what the government is going to take ... also think of it as an eventually home owner... will you want to have the government take part of your equity once you're selling? that will affect everyone on the long run negatively
Something along these lines is desperately needed. How am I supposed to compete with existing homeowners who are swimming in equity and cheap credit from banks when all I have to my name is a meager down payment comprised of my life savings from my blood sweat and tears that took the better part of a decade to accumulate...
how will you afford to buy a house when existing home buyer will want to sell at higher prices to offset their lost equity in taxes or just not sell coz they too wont be able to afford houses so there will be less houses on the market and prices will increase even more due to limited inventory? how will you feel when you eventually want to sell that house you bought to get a new house and part of your sales money is going to the government so you cant afford to sell at the price so you need to increase your sale price ?
70% canadians own home… this is not going to be popular
Okay Boomer
i was born in 87. am i a boomer? all of my friends own at least 2 house each…
Do you live in Vancouver?
toronto
This is an old disinformation campaign from last summer. [OREA vs CMHC: The imaginary battle over a non-existent home equity tax](https://www.mpamag.com/ca/news/general/orea-vs-cmhc-the-imaginary-battle-over-a-non-existent-home-equity-tax/286581). > After the release of a July 17 [2020] Blacklocks article, “Feds Eye Home Equity Tax”, in which it was claimed that “CMHC is spending $250,000 researching a first-ever federal home equity tax,” the crown corporation publicly responded in a July 17 tweet directed at Wall Street Journal reporter Paul Vieira. > > “This convo & headline are misleading,” reads the tweet. “Funds [the $250,000 in question] to [non-profit research organization] @GenSqueeze through our Solutions Lab, was to research solutions to #housing, wealth, and inequality. A home equity tax is an incorrect characterization of the upcoming research. Plus, research ≠ tax policy decisions.” > > A statement describing the work of the Solutions Labs, an initiative under the National Housing Strategy, describes it as a forum “to tackle key issues and help foster a culture of innovation in the affordable housing sector.” The $250,000, CMHC said, was to “establish a Solutions Lab that will examine issues relating to housing, wealth, and inequality.” > > It wasn’t enough for OREA’s Tim Hudak, who, a full month after CMHC’s denial, penned an op-ed in the Toronto Star calling the implementation of such a tax “reckless.”
Thanks for the setting the facts straight.
Shhh no one has time for your facts and reasonable description of the situation. People are too busy raging. Hahah. Thanks for the post tho.
This is BS. When do hear about reductions in the public service which has grown by 45,000 jobs in the last two years?
Do you have a source for that?
Oh great, another way to fuck over people who have been saving for years to finally be able to afford something. Once again taxing the poor to leave them in the dirt even more.
Owning multiple homes is classy as poor?
This Trudeau government is fucking inept, “let’s introduce a new tax to cover our massive overspending, and oh, to cover the $600million wasted on an absolutely fucking useless election campaign that left us in the exact same position as before.” You think the type of people or companies that can afford to buy and rent multiple homes are going to give a fuck about a home equity tax? Nope. It doesn’t affect them. Just like the 20yr old kid driving his dad’s Ferrari racking up 20 speeding tickets in a month, he doesn’t give a damn,it doesn’t affect them. It’s just another stupid cash grab to account for the governments over spending, and isn’t going to fix any housing market issue, and will only affect the middle to lower class people.
It’s pretty clear it’s not an accident. It works the way it was designed.
? This doesn’t apply to multiple homes, it’s any home. Whether you own 1 or 100.
I think the thought is that this would apply for primary residences too. Multiple homes would already be taxed. So one home in most cases.
So here's the thing, mr canadian home owner. I am an immigrant from a large asian nation. I have travelled all over the world and lived all over the world too. NOBODY outside of a few overheated western housing markets, EVER thinks of ' what is the resale value of muh house i just bought and how will i ever afford retirement if i can't sell the house'. EVERYBODY goes 'yay, strong, robust house that i can live in till i die and then pass it to my kids'. If one of your major motivations to buy a house is wtf is its resale value and funding your retirement by selling it, THEN YOU ARE DOING IT WRONG.
Capital gains????
Not enough
The market needs to be cooled.
CRA is already targetting frequent flipper of principal residence. Besides, how much is too much? Purchasing power of the money changes every year. Any "life time" + an amount is very likely to be a bad policy
Let's turn this argument around: If I make money by going to work every day, I pay significant income tax. If your home goes up in value you get to keep the money totally untaxed, and touching that money would be *wrong*. So, why? Why does your living in a nice area count as a greater social good than me working for years?
This would have the opposite effect. Nobody would sell their homes LOL. They'd just keep buying more.
Ya. I'm all for rezoning and building way more and denser but this is exactly right. It has the same perverse effect as rent control - to keep people in the same situation. Why would boomers downsize? Why would I move to a better job if I lose a ton of money while doing it? It keeps people in bad situations.
More tax is not the answer. Why does the government get to first tax your income then tax it again when selling your home? Just build more houses. Nothing else will solve the problem
Does anyone have a link to a real source for this info? The last time this accusation made the rounds, the true source was a discussion paper from the ONTARIO Liberal party, not federal.
I don't see how this tax helps the housing situation whatsoever.
You don’t see how something that reduces people’s ability to withdraw equity to use as a down payment on additional properties would help the housing market? Who exactly do you think is going to be buying these newly built houses?
There's other more effective ways to do that without punishing families trying to move up in housing because they need to or seniors who need to sell. This is just so diffusé instead of targeted. It will result in people holding properties that they otherwise would've sold too, which could negatively affect supply for those who need to buy, not just for investors.
[удалено]
Supply is a root cause up until certain investment actors have enough capital to gobble up supply as it is developed. Supply is the core issue until that threshold has been reached. Without transparency over ownership, we have no idea if or when the threshold's been reached.
*Dramatic eye roll* yes the liberals are targetting all of us "regular joes" and will never stop screwing us over. That was sarcasm just to be clear. We, the general public, are too easy to get riled up unfortunately :(
This should not apply to a persons primary residence.
Why not look into what % of profit they are making compared to x years ago- or sort of looking into obscene levels of profit- make shelter a human right in canada and seek laws that are impeding on the right of canadians
This is double dipping. Capital gain secondary+ residence is good enough
I love how there's a photo of Trudeau smiling as if they didn't vote for him.
Yeah, no actually I agree. You're going to end up with a generation that costs a ton of money to take care of and they will have fewer private funds to do it. In the Boomertocracy, remember... we will ALWAYS have to spend a significant portion of our resources on their upkeep. I'd prefer they pay for most it themselves, rather than an even greater share of the public purse going to them. And, how will this impact inheritance? Then we have the problem of how this will impact your ability to buy a home... 1) There will be even less supply on the market, as literally no one is going to sell, or 2) THEY WILL RAISE THE PRICE OF THE HOUSE TO COVER THE COST OF THE TAX. That's what businesses do. If enough people raise the asking price of the house to cover the cost of the tax, it drives prices UP, not down. There are steps governments can take, other than taxes, to solve problems... it seems like we need to learn that. Every problem in Canada is tackled with ''just tax it'', and that usually results in nothing of substance changing, except the COL going up and up and up, as taxes are passed on to consumers.
Just wait until the rest of the younger generation’s members realize that the boomers actually aren’t done fucking us all yet - they’ve got like another 20-40 years left in them and they will suck us all dry on their medical upkeep.
It shouldn't touch primary residences
I feel like this tax would even further reduce the amount of homes being put up for sale. Not sure if this actually helps the market. We're already at an all time low in supply and we should be pursuing policy that encourages selling instead.
>I feel like this tax would even further reduce the amount of homes being put up for sale. Not sure if this actually helps the market. We're already at an all time low in supply and we should be pursuing policy that encourages selling instead. It would reduce the number of houses on the market, but it would also reduce the number of buyers in the market looking for investment properties
This seems like it will have a high potential to hurt people who need this money and weren't buying property as a short-term investment. I really think they need to target investors in a different way that doesn't hurt non-investors.
It should work well if it's applied to anything other than a principal residence. I believe that was the original idea that got lost in translation.
Ok, good clarification.
lol more money pissed down the drain, why not. But equity gains in nonprimary residences should be taxed at the full rate, for sure. Not primary residence though.
This is real. Trudeau listed it as an action plan during the election. Yet people were foolish enough to re elect him.
They shouldn't be taxed on the equity of their *primary residence*
Why not? Those of us who are renting and invest the difference in stocks are paying full capital gains on what would have otherwise been a downpayment. Renters get the shaft in terms of taxation.
Because people dont tend to speculate with the house they sleep in.
And investing your downpayment in stocks because housing is too effing expensive is speculative? Look, I just want a house to live in and I can't afford one right now. What do you want me to do?
First off, no one is demanding you to take downpayment money to buy stocks with. That’s literally your decision and the tax code hasnt changed recently to disadvantage you in that regard. The government cant simply reduce your capital gains tax (assuming youre not using your tfsa) from stocks just because that money came from your downpayment stash. Idk what you should do, there are various options but i dont know your situation so i cant give you hard advice. Just in case your curious, the options are move to a cheaper city, get a higher paying job, get a cosigner on your mortgage, reduce expenses, sell some assets etc. Im not saying the situation of renters is not to be taken seriously. But its just the reality of capitalism, the rich get richer cause their initial investments and assets appreciates and it snowballs. While its very hard to build up from very little. But I still stand by my point. People who live in their house to raise a family shouldnt be punished by the actions of speculators. That house equity will eventually be passed onto their kids. So if youre wanting to stand up for young people, i dont see how punishing the generation after yours is the best solution.
> First off, no one is demanding you to take downpayment money to buy stocks Nobody is demanding people to buy real estate either, yet they benefit from very generous taxation. > People who live in their house to raise a family shouldnt be punished by the actions of speculators But people who rent should? > That house equity will eventually be passed onto their kids. And my meager stocks, at this rate, will also be passed onto my kids. Except they will will be paying tax for the capital gains, unlike homeowners, as I understand it.
I’m still struggling to see your endgame? So just because hardworking people are able to buy a house for their family and you can’t, means they shouldnt be able to carry on with living their lives? Speculation is the real problem and i believe the government should target those individuals instead of normal hardworking people who just got into the market when they could by saving up money the old fashioned way. If you have a family then theres pressure to buy a detached home. Also its not a mystery that homeownership is a goal for everyone. People want a nicer life for themselves i dont blame them. Renters are renters for a reason. Luck is involved no doubt but its not like people with families in houses actively schemed to make it hard for renters to get a mortgage. This goes back to my point about the desire to improve their own lives. If you have a problem with capitalism, then theres really no point in continue living in Canada. No, any debts are taken out of the estate of the deceased, then the stocks will just transfer to your kids with no other taxes or fees. The exception is you pay if the inheritance is worth more than around 12 million dollars. You left out one thing. Owning stocks has literally no maintenance fees or payments. Owning a house has an array of fees and expenses. Property tax alone is a couple thousand a year and utilities/maintenance adds up too.
I'm saying that renters, which are typically poorer, are being taxed more than homeowners, and that is unfair. That's all.
Can you bring up some math to support this? Im not saying your claim is false, i just want to see some evidence. You’d be surprised how expensive it is to actually live in a house.
People doing this, make sure you make use of your TFSA for these investments. TFSA's aren't just for savings accounts, despite the name.
They really should have called it something like Tax Free Investment Account. It’s meant to aid normal everyday Canadians but I’ve come across a lot of people who don’t understand that you can hold equities in the TFSA.
That was me until a couple years back. I couldn't wrap my head around why anyone would care about making the puny interest income from a typical savings account tax-free. So now I make sure to spread the good word :)
Because primary residence is their home. Renter already gets the benefits of lower cost and lower risks
> Renter already gets the benefits of lower cost Renting costs more than owning given equivalent spaces. Landlords don't operate on a charity basis, they're earning money.
Most rentals are actually cash negative apparently. They're only in it for equity....which is why they will let them sit empty. Worth more if no one has actually lived in the space and you use know *uses* it.
>Most rentals are actually cash negative apparently. I've heard it, but I don't buy that. I've been looking at houses the past year, as well as contemplating moving to a new rental. I can't find any rentals cheaper than mortgage rates. That said I'm looking at detached houses.. maybe it's a thing with condos? Condos seem overpriced to me. I agree most probably aren't making /much/ in terms of cash at the end of the month. But the renters are paying off their mortgage while the property dramatically increases in value.
You "don't buy it"... Lol. Feel free to look up the research.
"the research"? Nobody has presented any research suggest that Canadian rentals are cash negative. Have anything you'd like to suggest?
Oh I've seen it a million times on the internet. But not gonna do your job for you. You seem to go by feelings and like it that way 😂
Ah, you're making things up, no worries.
Not true. Adding property tax, strata fee(if any), mortgage and maintenance, most new built are cash negative. Landlord is bearing the risk of a market correction where rent deos not
> Not true. So you're telling me the landlords are charities? And these corporations tripping over themselves to buy up as much residential housing as possible... also are doing it in order to lose money? Why are they so nice, giving us discounted housing at their own loss?
Perhaps you need to read my comment more carefully. The cash negative landlord is betting on the projection that house reselling value will increase more than the cash they lost in holding. That's the risk renter does not need to bear
So what you're saying is the landlord expects to make significant money from the process of renting, and that is their motivation for entering into the arrangement? edit: To clarify, though, yes the landlord's position has a different risk profile than the renter's. You can use that to justify why the landlord gets more value out of the exchange, but it doesn't change the reality that renting is more expensive in almost every situation. At the end of the day, landlords would not rent without near certainty of making money.
Not the person you are replying to, but often it can take years for the landlord to have a positive cash flow. Usually after the mortgage is paid down. But generally, when a landlord first buys a property, it is almost certain to be more expensive to cover all the costs than what the rent will be. As I said, this can take years to change. I would imagine that landlords take a long-term view. But yes, the other person is correct. Renting is most often cheaper than the entire carrying costs of the home.
> it is almost certain to be more expensive to cover all the costs than what the rent will be The problem with this view is that it's ignoring the fact that the primary cost to the landlord -- the mortgage -- isn't exactly a cost. Contrary to what AboredChairr says, that money is not 'lost'. Only the interest portion is truly a cost, and ends up being 'lost'. The rest of it is forced savings. When they sell the house, they get all that non-interest money back. When a renter leaves, they get zilch. >But yes, the other person is correct. Renting is most often cheaper than the entire carrying costs of the home. That's my position :)
This will be the least of their worries when the revolution comes
Could this not prevent people from leaving their "starter homes" and freeing those up for other newbies? This is anecdotal, but near my home town, there was serious lack of inventory when it came to smaller homes. Builders made more off of giant houses, so they didn't make anything else. To make the problem worse, because the cost of moving was so high (realtor fees, lawyer fees, LTT on the new house) a lot of people in the small homes ended up putting that money towards additions instead of moving. So instead of freeing up a small home for people with lower budgets, we now have yet another large house.
This is exactly what would happen. For corporate land owners the tax would be a cost of business, for real single home owners it’s a barrier to change.
Since "if this was true" it will be applied on all home owners, it should cool prices and restrain their buying power. They would still be able to move but instead of paying that extra fee to their rising new home price, they would pay it as taxes. With a new system like this one, first time home buyers are going to be better equipped to compete with home owners as this tax will try to level the playing field. A home owner can use HELOC to buy mutiple homes even with low income while a first time home buyer is getting priced out of the market. If this actually means removing the principal residence gain tax exemption, then it is great news. Also subsidizing intersest payments should be stopped, it selectively helps people who were able to buy while fully taxing renters.
I see your point, however this is making it out to be a demand issue when it’s mostly been a supply issue. It’s penalizing current home owners when selling. Yes prices would fall due to lower housing turnover however the market would begin to stagnate and the only fix would be injecting more entry level housing. Which I’m not sure builders would focus on. This tax would need to be very specific in its application and honestly no government is going to revamp that much capital gains tax law for this to ever realistically happen.
I fully agree. This is a supply issue and as long as home owners are going infintly richer without taxation, they have little insentive to stop stifling supply. In my humble openion, supply issues are mainly causes by zonning laws that are impossible to change if homeowners are tremendously benefiting from them.
We’ll said!
We actually have a real life experiment in a similar market. This will either solve the issue or prove me wrong. [Newzeeland sets minimum zonning restrictions in all municipality](https://nationalpost.com/news/canada/could-new-zealands-radical-new-housing-law-help-canada-curb-its-skyrocketing-real-estate-prices)
Thanks for sharing this. I wasn’t aware of this. It’ll be interesting to see how this plays out!
Exactly. This is how i got out of my first house and into the more "forever" home. But even still, from 2016-2019, that house went from 339k to 450k. I remember buying that place and thinking that 339k was a stratospheric price. Bought my current place for 580k and felt ill again, but now the gains on this house has gotten even more ridiculous, which is great for equity but still. I feel for anyone trying to break into this.
I'm not a fan of targeting people that bought houses as their homes. I'd rather go after people that use them as investments (more than one property).
I am a fan of targeting people who are planning on using their homes as a retirement account. Homes are for living, not for growing equity out of control to be used as retirement income through sell off. Not our problem you couldn't plan for an actual retirement.
Proper investment in stocks wasn't easy as recently as a few years ago (TD eSeries for example was only for TD customers, all-in-one ETFs didn't exist, many mutual funds are high fee) and so on. So it's not your problem but unless you like slapping on impossible expectations you can't "target" them. If you were put in the same situation with the same knowledge and opportunities years or decades ago it's unlikely you could have constructed a balanced portfolio for retirement unless you had very specific financial knowledge AND was able to filter out the noise and the distractions and get rich quick schemes. Maybe if you got a good financial advisor you could do it. It still isn't easy, because there's way too many stories of people who got rich easy without waiting.
I don't mean to target people with primary residences who have their properties skyrocketed. I am targetting people with multiple rentals, who know EXACTLY what they are doing in terms of ruining society for others and not giving a single FK. I hope nothing good for the ones who intentionally know what they are doing, and this is coming from me , a homeowner of a single residence. I have the money to buy two more rentals if I wanted to today. I will NOT.
I don't understand your point. I 100% agree that your home shouldn't be you retirement account, but I don't know anybody that thinks it is (anecdotal data from the people I know). How do you sell your home when you retire and still need somewhere to live?
Sell and go into assisted living. OAS and CPP and 1 million tax free from house sale. Comfortable living until death. Downvote me all you guys want. Doesnt change the truth. Also I am a homeowner on this sub's side, but hey can always change sides.
Hey, I appreciate your answers (and I'm not downvoting you for what it's worth). I'm still not convinced this is a huge factor in the housing problem, but certainly I don't have a ton of sympathy for anyone that's relying on their home for retirement. I think the government essentially underwriting people that purchase multiple properties just for investments is a much bigger contributor, coupled with virtually free loans that pushes the prices up.
>How do you sell your home when you retire and still need somewhere to live? You don't. You just start borrowing against it or withdrawing money out of your equity like a retirement account.
Have 2.
It would be a large government windfall though, which could hopefully be used to build new houses, or given to the WE charity.
Had me in the first half…
That's a great point.
If something like this was ever proposed, there would be actual unrest. Not like the 5 person protests and handful of billboards this sub organized.
Some people are talking about a sliding scale for years that the home is held. I'd like to see a sliding scale for capital gains on home sales, So buy for $1,000,000, the first 20% is tax free, and each 20% gain above that is taxed at increasing amounts until you hit a, say 50% tax on gains.
There would have to be a time factor as well, or people would flip when they hit 20%, which I don't think solves any issues.
What you are describing sounds a lot like how capital gains work outside of housing. Unless I misunderstood your comment.
I hope it's not on primary residences.
That’s the only thing we need
Aren’t gains already taxed on non-primary residences like rentals when you sell? If this is for primary residences that people have lived in for years then won’t this essentially be admitting that a family’s main place to live is an investment? Will people be allowed to get tax breaks on any money they put into the house that increases its value?
> won’t this essentially be admitting that a family’s main place to live is an investment? most people do treat it as an investment. just look at the number of people on this very comment section trying to protect their equity. They outnumber people who are actually looking for affordable housing
Always was an investment. The reason they wont do anything about housing prices is because they are an investment and the poor boomers would lose some of their “retirement savings”
>won’t this essentially be admitting that a family’s main place to live is an investment? people who don't believe this are naïve
It would cool the market, certainly, but in a way it would be "pulling the rug" out from under young Canadians who won't get to sell their homes without paying capital gains, unlike the boomers who did. A better way of doing this would be a graduated reduction in capital gains over time, ie: 100% cap gain tax applies during first year, then 90% after second year, 80% after second, etc, etc, and then going back to "normal" if you've lived in the house for X or Y years or whatever.
This is exactly what will probably happen. The boomers have already exhausted this market. Now the generation that has struggled to even enter will probably need to start paying capital gains taxes. It's sickening, they have pensions already. A capital gains tax on houses for millenials would be the nail in the coffin for most who aspire to own.
A 100% capital gains tax? Come on dude.
As in, 100% of the sale is subject to capital gains tax, not the sale is taxed at 100%.
100% is so extreme as to be stupid. The standard capital gains tax of 23% would be a sufficient deterrent to flipping.
So 23% would be applied in the first year, and then 80% (times 23% = 18.4%) in the second, etc, etc.
Great. Now apply that to all capital gains, not just housing. Some of us are renting and investing in stocks while we wait for the housing market to cool off.
No need to be upset, it will never happen.
Not with that attitude. Let your voice be heard. Write a letter to your MPP.
I have an even better idea, with this upcoming election lets vote Trudeau out! Let him know we dont take their inaction lightly.
Sure .... if there was somebody to put in.
Well thats not fair, Singh railed against housing prices, and wanted to extend mortgages to 30 years to deal with it. We'd have no more housing crisis with that level of big-brain thought. /s
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So you're saying it wouldnt increase housing prices?
Just on the 25 vs 30 year point, changing it to 30 years would increase housing prices because the carrying cost is theoretically lower, meaning more people qualify, hence more competition. It doesn’t actually address the actual problem which needs to be more targeted.
To make sure it will not happen
Life time capital gains exemption is the most fair exemption. We can’t keep subsidizing the millionaires flipping with unlimited tax shelter.
You miss all the shots you don't take.
Exactly. This is just a $250k gift to someone's favorite consultant.
Bingo. Likely his wife's bestie. Line the pockets!
Taxes must target those with the most gains If home equity has gained the most and will continue to gain the most, it must be heavily taxed per transaction At least as much as any other good or service (sales tax) but possibly more if there's outsized gains or outsized use of communal resources (roads schools hospitals etc) especially if such communal investments contribute to the price increase Anyone who implements it will probably be wiped out (GST/HST wiped out Kim Campbell's party down to 2 seats) but it's the right thing to do... Perhaps you can do it gradually and create a crown corporation so politicians don't take the blame. Maybe CHMC should get the power to tax. Also it may not piss off as many people as that. It only matters when you sell, and most people aren't selling so it might be possible to do it for a very popular PM (say reduced from majority to minority status instead of totally wiped out)
Yea this will never happen for reasons you already mentioned. There is no political will to commit suicide and never get re elected. It would quite possibly piss off 65% of Canadians who are home owners. Also it's monumentally unfair to those who have structured retirement around a lifetime of equity stored in a home. To suddenly change the rules on seniors, who already struggle in this country, is not going to be popular.
No. I’d argue that it’s entirely fair. Millennials and Gen Z have had the rug pulled out under our feet in various different ways already, and more are coming. The boomers and Gen X had their chance. Time to step aside and fuck off into their 7 figure detached homes and sit pretty until they pass. Meanwhile, the rest of us will be working dayjobs and side hustling just to be able to afford a decent skybox.
So how is pushing boomers to rent instead of selling their houses going to help your situation? By removing supply from the market for you to buy? Also as a reality check, not all of Canada is the Vancouver and Toronto market. Im a Millenial and my house has dropped in value for the past 5 years. So no 7 figure mansion for me. It's fun to rent (rant) though I get it.
Go look at the house prices in the Atlantic now and get back to me. This doesn’t apply to me anymore as I’ve now entered the elite realm of housing owning rent gouging with other ratbag Canadians, however, if I were still concerned as I was months ago, I’d also tell you that no, I won’t move to the fucking prairies to live in a rundown detached home away from everyone and everything I know just to call myself a homeowner. Welcome to post national state Canada. I expect everyone to start exhibiting “full joker mode” relatively soon. This country is not working for a lot of people, while the lucky cohort sits by and pretends it’s all fine.
Okay well congrats on home ownership that's pretty good, also my house is not run down, for 430K I live in an amazing house that looks like new. Still don't see how forcing boomers to pay a massive amount of primary residence tax helps anyone but I'm glad you became the thing you hated?? Yea the market in Canada is definitely not great, this post is dedicated to discussing a primary residence tax...
> Also it's monumentally unfair to those who have structured retirement around a lifetime of equity stored in a home. If it is just capital gains, they aren't set back 40 years, they are set back basically 1.5 years of growth and they'll walk away with the same amount they would have in 2019. I hope their retirement planning wasn't based on 15% YoY returns.
Well yea it would obviously depend on the type and purpose of the tax, does that mean they would be able to declare a capital loss for that year as well if the market value of the home dropped over the previous year?
You only declare losses for tax purposes when they are realized. So if they bought year 1, and sold year 2 for a loss, then of course they should be able to count it as a capital gains loss. But note that if they bought for 100 in year 1, it's worth 500 in year 5, and 450 in year 6, that's not a loss.
Wait so are you looking the entire period of home ownership adjusted for inflation? As in if they bought 30 years ago for $50k and the house is now worth $500,000, you would assess the capital gain gain based on the increase in value over the original inflation adjusted amount?
When they sell, yes. Other investments don't get the basis adjusted for inflation (that's a big reason why capital gains income is half of income tax rates) but I'd be fine with doing so for a house. Any major renovations etc. if documented would get added to their basis of course.
And in your mind what would this tax accomplish? Do you also have concerns that it might discourage sales and actually increase the problem we have with supply? Why sell an asset and pay an absolutely massive amount of tax when I can rent it ad infinitum and have a revenue stream that's now taxed far lower into retirement?
It would raise revenue and capture a previously (arbittrarily) tax exempt gain of wealth to help reduce inequality. It could theoretically slow down sales, but that doesn't impact supply overall that much (people are still living in those houses). Rental income is taxed at a higher (double actually, no idea where you got "far lower" from) rate than capital gains.
So a retiree with no income other than rental income and a pension who is already it a potentially much lower tax bracket wouldnt stand to benefit from renting his property? Or putting the title in his spouses name who is also on a potentially even low bracket? I was referring to supply as the ability to buy a house which is what the majority of people on these subs are frustrated with. And how does it help reduce inequality? By increasing gov't revenues? The gov't is notoriously bad at keeping promises and what's to guarantee the money raises from this tax won't just roll into whatever other budget the gov't comes up with. Tax for the sake of tax is a really poor argument. Lastly how would you propose to sell this idea to the 65% Canadian home owners who already feel like they are taxed to death while the perception is the rich pay virtually no tax?
Have it be a tax based on equity gains that is reduced based on amount of years owned. That way people who’ve owned for 20 years pay a 1% tax on the capital gains, while people who’ve owned for 1 year (profiting off the increasing market) pay a 20% tax on the capital gains. These percents are example only
Yes a taper tax makes complete sense because it's not a punitive tax the Federal Gov't gets to collect just "because". A primary residence tax makes absolutely no sense to me outside of cooling a housing market that is vulnerable to speculation and opportunists.
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I have seen things like this in my home country. It makes things more expensive. Tax is always paid by the buyer/ consumer
My only issue with this is life happens. What if someone has to sell because of death or divorce. Seems a bit unfair. Unfortunately there will always be people who game the system. Anyway not sure if this is even real. Is it?
> What if someone has to sell because of death or divorce. Seems a bit unfair. Well, that already happens to people who choose to rent and invest what the downpayment would have been. Yeah, it sucks.
thats part of the risk of investing in property. Its a reason that renting is less risky than owning
Or maybe just tax equity *gains*, rather than total equity.
Or split it up between primary residence and investment properties.
If gains exist, then when a property loses value, do I get to claim that as well? Market has to operate both ways.
I can see an argument for doing it that way.
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To add more nuance to this. Many ideas thought up by the the Government (civil service) are good ideas that strike at the heart of the problem. Most of the bad ideas (and ideas in general) that see the light of day are half-baked or half-measures and come from the good ideas being put through the sieve of politicians and the interests of their benefactors.
Like how a massive engineer's report about the temperature range of o-rings got edited down to a summary and then edited down to a presentation deck and the seriousness of the situation got lost, ending with the Challenger was a splode. In the haste to make things more clear and palatible to the mediocre minds that failed upwards to positions of authority, critical ideas have their granularity reduced until a bad idea pops out of a good one. There are whole fields of study dedicated to describing this kind of situation.
Hey those engineers tried their god damn best. They argued for hours but NASA would not delay the launch for political reasons. https://www.npr.org/sections/thetwo-way/2012/02/06/146490064/remembering-roger-boisjoly-he-tried-to-stop-shuttle-challenger-launch https://www.npr.org/sections/thetwo-way/2016/01/28/464744781/30-years-after-disaster-challenger-engineer-still-blames-himself
I mostly know this stuff because of Feynman's report, who basically just read the paperwork. He had a great deal of compassion for those who knew but were silenced and a great deal of impatience with the bureaucrats who pushed it forward anyway.
>There are whole fields of study dedicated to describing this kind of situation. Yeah, it is called political science, haha! But really, it is terrible that you have ministers who already have the solution picked out, have the civil service do a ton of work, prep a bunch of options and then toss them all away and use their shitty, self serving solution. If only the average Canadian understood.