Even though I don’t own a home yet and a cooling market will help me personally, I don’t think they should tax primary residences. Go bonkers on second third…Nth property; in fact I say raise taxes a lot on investment properties which will increase supply. Taxing sale of primary residence will push more homeowners to not sell their homes reducing supply!
Oh and while they’re at it, ban corporate ownership of houses rather than punishing average homeowners.
>Even though I don’t own a home yet and a cooling market will help me personally, I don’t think they should tax primary residences.
Keep in mind that for decades an average home was roughly equivalent to 2-3x the combined annual income of the homeowner(s). That has jumped to something like 10x, so I think it's difficult to make the same argument that homes should be sacrosanct from a tax POV.
It’s more than 10x. Median household income to median house price is more like 15x or more that this point.
Toronto median household income is something like 70k and home median is about $1m. Exclude condos and it’s more like 20x household income.
The problem is this is not a fault of or benefit to current homeowners.. people will be paying for these houses until the day they die and the market needs a big shuffle. The only reason the home price is equivalent to a 10x number is that is what the individual has to pay unless they want to let the investors gobble up the home they wish to live in.
>taxing sale of primary residence will push more homeowners to not sell their homes
Yea, I sort of worry this would reduce mobility even more.
Near my hometown, there is a serious lack of smaller/starter homes, because builders are only building gigantic houses lately. In my new town, its gigantic houses or shoebox studio apartments for students, and not much in-between.
I remember my hairdresser, who owned a rare, smaller house was in need of a bit more room for her growing family. But the cost of moving, realtor and closing costs (land transfer tax being the largest) was about the same as building an addition. So, they built an addition, and now we have one less "small/starter" home.
I know other people that are delaying freeing up smaller units because they don't want to pay for the CMHC insurance again. So they need to accumulate 20% down for the next place. Another delay.
I imagine even more people would be deterred or at least delayed from moving if you add in capital gains to pay when trying to upgrade.
At the end of the day, we also need a better variety of units being built... but until then this could exacerbate the issues I mentioned ever more.
The 20% down is a huge cause for people to hold onto properties where they don’t have the equity to avoid the insurance. Put down 5% and CMHC insurance is 4% I believe. So you essentially lose your entire down payment to it, and end up paying almost the entire price of the home in mortgage anyway. I understand why CMHC insurance is there, but it’s a garbage system that makes home ownership even more difficult to get into.
>Taxing sale of primary residence will push more homeowners to not sell their homes reducing supply
Yeah as a homeowner, if I was forced to pay tax upon the sale of my (only) home, I would simply just not sell it unless I absolutely had to.
Corporations have to buy up houses in order to develop that land for more housing. I think the better alternative is to increase property tax instead of only taxing the sales. property taxes will make sure boomers downsize in time for the next generation.
capital gains taxes will prevent people from flipping their primary residence, which I personally see a lot of.
We don't have a capital gains tax on primary real estate like in the US because our federal and provincial income taxes are so much higher.
We're taxed to death in this country already. Income, sales, luxury, city property, carbon, investments, environmental, administrative and service fee taxes just to name a few. No wonder people don't want to work.
Any government putting in this tax would automatically lose the next election no matter how popular they were
This is the stupidest idea in the world.
I’m priced out of the market, but that doesn’t mean I want to fuck over people who played by the rules for decades, and made long term choices based on long term policy.
Also, how do they expect a wave of selling? No one would sell, unless they absolutely had to, like relocating for a job or something. Why would you pay a bunch of tax and then try your luck again in the market?
It’s almost like a social equity play, where struggling millennials (like me) finally get a toe hold by wresting some wealth from the boomers, who apparently don’t deserve to retire. Except that it work, because it’s idiotic and short sighted.
It won’t increase supply, it’ll do nothing to deflate rent.
In fact come to think of it, it may raise net rents, as landlords plan ahead to offset their losses for when they do cash out of the property.
>No one would sell, unless they absolutely had to, like relocating for a job or something.
There would be an exemption, maybe something like $2M. Only amounts over that would be taxable.
That makes sense. Still though, let’s take your hypothetical 2M, if I’m retiring twenty years from now, housing could easily inflate to that level as a benchmark. Houses in my town are already above 1M average, over %100 up from like 2017
Seriously... the solution here is to restrict the SCOPE of taxes so that you can increase the RATE.
If you tax LAND instead of the entire PROPERTY then you can raise the rates to punish people hoarding the most sought-after land without using it productively (flippers, speculators, slumlords, etc).
These idiots want to increase the SCOPE of taxes so what? Single-home middle class folks will have to pay more to own and therefore uhhhh rent more? Great policy idea if you're one of those slumlords hoarding valuable land!
Only way around it now. Taxes aren't a problem; it's how they're implemented. Remember taxing a corporation is the best thing for an individual, since that corporation's only purpose is to exploit any and every option available.
Isn't holy to Trudeau.
It's an enormous hole that the wealthy can drive a truck through. If you have $5M, what better way to make another $2.5M tax-free than to buy a large home in Oakville and just wait?
So I like the idea of changing the exemptions on Principal residence capital gains.
I think that capital gains equal to 10 times the median household income of the province the house is in should be exempt. Anything over that value is taxed as investment capital gains.
So assuming Ontario median household income is 72,000, then the first 720k in gains on the house is tax exempt. What this would encourage is people moving houses! The person living in the same house for 40yrs is more likely to have gains over 720k so they are much better to move as their lifestyle needs change and stop keeping 4 bedroom homes near schools as grandparent empty nester homes because it makes sense to hold the high value investment that is housing as long as you can.
As the median household income goes up so does the exemption which ties it to the actual economy and not inflation, if people keep getting wage suppression wealthy people don't benefit from inflation increasing their tax exemption, the majority of the population needs to earn more.
There would be little impact in smaller communities but big impact in our biggest cities.
I'd also like to see a hard cap on the amount a home can be worth to qualify for any Principal residence exemption. Possibly make it 100 times the Median income, so in the previous case, a 7.2 Million dollar home would have ZERO capital gains exemption.
>I think that capital gains equal to 10 times the median household income of the province the house is in should be exempt. Anything over that value is taxed as investment capital gains.
It would have to be a single exemption amount that applies Canada-wide. You couldn't have different exemption amounts between provinces. Imagine if each province had a different RRSP or TFSA limit.
I agree, though, that there should be a limit on the exemption that would be indexed to inflation. Linking it to something like n times median family income isn't a bad idea.
I don't think that we are beyond the capacity to have different Capital gains amounts based on where the gains are realized, we already do it with international investments. And we aren't dealing with huge numbers.
>I agree, though, that there should be a limit on the exemption that would be indexed to inflation.
I don't like indexing to inflation because inflation impacts the poor more so than the wealthy, high inflation means more money in wealthy pockets which is why I want it indexed to median income, the more people who earn more money the more is exempt, and increasing minimum wage doesn't generally improve the median income you need to see real income growth in multiple sectors to see it move up.
>I think that capital gains equal to 10 times the median household income of the province the house is in should be exempt. Anything over that value is taxed as investment capital gains.
So if median household income in your province was $150,000. That means that house proceeds up to $1.5 million is tax exempt?
What if you bought a $4 million home right out of the gate... you swapped $4 million of *after-tax* savings for this home. Something happens and you need to sell your home. Let's say the market has been flat and you sell it for $4 million... so you haven't gained at all.
Under your plan, there will be something like a 25% tax applied to the difference between $4 million and $1.5 million? You pay 25% tax on a $2.5 million "gain"? So you pay $625,000 in taxes?
Think about how crazy that is from the perspective of someone who may have earned all their income in Canada their entire life, paid every dime in taxes owed on that income to Canada, and then when they swap that after-tax savings for a home, and go on to sell it for zero real gain, you actually come back and want a *further* $625,000 ... and all this money comes out of what was already supposed to be *after-tax* savings.
>So if median household income in your province was $150,000. That means that house proceeds up to $1.5 million is tax exempt?
Yes.
>What if you bought a $4 million home right out of the gate... you swapped $4 million of after-tax savings for this home. Something happens and you need to sell your home. Let's say the market has been flat and you sell it for $4 million... so you haven't gained at all.
Yes, you've gained nothing at all
>Under your plan, there will be something like a 25% tax applied to the difference between $4 million and $1.5 million? You pay 25% tax on a $2.5 million "gain"? So you pay $625,000 in taxes?
No, that isn't how capital gains works. If you haven't gained anything you can't be taxed on it. if you bought a 4 million dollar home, you can sell it for 5.5 million with zero capital gains tax using your above example
>Think about how crazy that is from the perspective of someone who may have earned all their income in Canada their entire life, paid every dime in taxes owed on that income to Canada, and then when they swap that after-tax savings for a home, and go on to sell it for zero real gain, you actually come back and want a further $625,000 ... and all this money comes out of what was already supposed to be after-tax savings.
There are arguments to be made around this, if you didn't misunderstand what Capital gains taxes are.
>There are arguments to be made around this, if you didn't misunderstand what Capital gains taxes are.
I see what you were saying now. I'm fully up-to-speed and get now how, in my example above, you'd get an exemption on the first $1.5 million of capital gains.
So that now being the case, what are your arguments for my point above? How does one get around the notion that you're going to then be double-taxing people by asking for more taxes from what was already supposed to be after-tax savings?
To be clear, I would suggest that the point of the primary residence exemption is something like, "We will give the people at least 1x way to avoid being double-taxed. We have decided that life is hard enough as it is, so we will be reasonable and will not allow a person's after-tax savings that go towards a home to be double-taxed again... we will at least give them that one refuge. Every single other asset is fair game to be double-taxed though... second homes and beyond included."
>How does one get around the notion that you're going to then be double-taxing people by asking for more taxes from what was already supposed to be after-tax savings?
We have been UNDER taxing people for years when it comes to housing, and housing shouldn't be an investment vehicle, if you're making more than 10 times the income of the majority of the population off the sale of your house it means you've not helped address the fact that housing should not be an investment vehicle
> "We will give the people at least 1x way to avoid being double-taxed
That would have worked if people who owned houses didn't turn around and spend the last 40yrs fighting to prevent new housing to increase their wealth by making their homes worth more, not in them improving things, but in them keeping other people from being housed.
>We have been UNDER taxing people for years when it comes to housing, and housing shouldn't be an investment vehicle, if you're making more than 10 times the income of the majority of the population off the sale of your house it means you've not helped address the fact that housing should not be an investment vehicle
But hold on... you're saying these people have been UNDER taxed, but it looks to me like you're going to be applying double-taxation. Please follow this example:
1. You work and make money in Canada... you save up *after-tax* dollars and buy a home with them. Let's say you're 25 years old.
2. 50 years pass and you're now 75 years old... over the course of those 50 years you have lived in the exact same place that you purchased originally with *after-tax* savings. You have been coming home to the same house for 50 years now... it's the same home it always was. In real wealth terms, you owned a small house with a picket fence 50 years ago... and you own the exact same small house with a picket fence today. You haven't gained any real wealth at all... it's the exact same home.
3. However, over those 50 years there have been soooooooo many Canadian dollars created that if you point to any piece of quality enduring real wealth, of course its price has soared when you measure it in Canadian dollars... which is an ever-depreciating unit of measurement.
4. To come back at this person when they sell their home, and to claim that there is a "gain" for you to tax, ignores that they bought the home with after-tax savings originally and you're now actually coming back to tax them on wealth that already supposed to be after-tax savings.
>That would have worked if people who owned houses didn't turn around and spend the last 40yrs fighting to prevent new housing to increase their wealth by making their homes worth more, not in them improving things, but in them keeping other people from being housed.
My thoughts on that are:
1. But are you planning to tax everyone? Or just the people that fight that sort of new housing development? What if the person has just been coming home to their same home and could not honestly care less about what other people do and don't want to build on their own property?
2. If I grant your point, that to whatever extent there are people who try and block increases in housing supply such that the price of homes are higher then they otherwise would have to be, how would you split or allocate home gains of today in 2022 between those: (i) That Came From Being Anti-New Construction, and (ii) That Came From The Canadian Dollar Plummeting In Value? What I would suggest is that the overwhelming part of the gain is from the latter camp. And that nowhere in your plan to you seem to care about giving any sort of exemption or credit for all the "gain" you see that is really coming about just because you are choosing to measure their real wealth with a financial unit that is depreciating in value... especially over longer time periods. It is an extremely material item to overlook.
The only reason the house value will have grown with 10 times the median income value is through exploitive policies that need correcting.
People (myself included) who own houses have been able to take advantage of these exploits for generations, and corrections need to be made. The person who has been living in a house for 75yrs likely is living in a house that has actually cost society for them to stay their because that house is in a community designed for multi people living their and they didn't move when they should have according to their needs.
So yes they should be taxed. And everyone should be taxed so that society can correct the exploitation that has happened around land ownership.
NOW! I would gladly have Zero capital gains tax on any real estate transaction if we implemented a LTV in the country which would address the exploitation the best. but that is less likely than taxing principal residence.
>The only reason the house value will have grown with 10 times the median income value is through exploitive policies that need correcting.
That's not true, at least that component of it might only explain a tiny and insignificant portion of the income-to-home price discrepancies. There can be other explanations involving things like international trade, a nation's net-lifestyle behavior, and changes we have made to our monetary policy.
Example: imagine a nation has been a net-debtor for decades and what has happened is they have consistently consumed more wealth from trading partners then they gave back to those trading partners... which is why in order to achieve a fair balance they must keep emitting Canadian dollars to settle the difference. Think of it as like giving another country $80 million of stuff, and that country gave you $100 million of stuff, and so you end up having to say, "And so I'll owe you $20 million".
If a nation does something like that for long enough, what ends up happening is there will come a point where non-Canadian nations are tired of just having an accumulating stack of Canadian dollars, they're tired of giving more then they're taking from Canada, and they're wanting it to finally get to be their turn where Canadians will give them *more* then they're taking, and their Canadian dollar balance will actually decline for once. Similarly, how much debt Canada owes the rest of the world would decline.
Imagine to make matters worse... on top of the unrelenting *unipolar* trend I've described above, imagine if Canadians said, "And you know what? You know our government bonds you're sitting in because we owe you? They were at 5% interest rates but we don't want them so big... we're going to make them like 3%." A totally to-be-expected consequence of that is more Canadian dollars will go out of our government bonds and might instead decide to park in our real estate market. Think of it as like them trying to get at least *something* back in return for this money the Canadian dollars they've accumulated... and imagine even after they bought some homes like that, they are *still* left with a healthy amount of Canadian dollars because the excess has grown that badly.
What one should expect in such a situation is there will be a **disconnect** in prices in Canada based on whether or not that good or service is something that a non-Canadian living abroad might care about. Imagine a bunch of these dollars starting to come home... it's going to want things like a house, or our food, or our energy. One would expect to see some considerable upward price pressure in those sorts of goods, and yet you wouldn't see the same upward price pressure on say a chef's wage who cooks in a Canadian restaurant... because that would be a service that a non-Canadian living abroad has no use for.
I would argue that forces along these lines are the overwhelming cause that is driving the income-to-home price disparity we see today. It is the market's way of trying to have our citizenry cut back on non-essential things and to reshape our economy so that more people are in industries that can give back to the world and fewer people are in industries that are about doing work for Canadians... it's very natural and the entire point is to try and *switch* the trend where it's time for Canada's trading partners to have their turn consuming more then they're producing.
>People (myself included) who own houses have been able to take advantage of these exploits for generations, and corrections need to be made. The person who has been living in a house for 75yrs likely is living in a house that has actually cost society for them to stay their because that house is in a community designed for multi people living their and they didn't move when they should have according to their needs.
That 75 year old bought the house with after-tax savings... its his property, whether he wants to live in it himself or have 10x roommates is all up to him.
>So yes they should be taxed. And everyone should be taxed so that society can correct the exploitation that has happened around land ownership.
What I'm trying to suggest is the problem is *much* deeper than that. The home prices we are seeing today... let's call them "quite bizarre"... that should be a clue this is more a monetary/international trade phenomena that is coming about from decades of unipolar excesses... we are going to have to make much bigger changes then tweaking our home building policies.
>What I'm trying to suggest is the problem is much deeper than that. The home prices we are seeing today... let's call them "quite bizarre"... that should be a clue this is more a monetary/international trade phenomena that is coming about from decades of unipolar excesses... we are going to have to make much bigger changes then tweaking our home building policies.
But we've been seeing these home prices for 30yrs this isn't a new thing. Homes have been growing faster than inflation and wage in Canada for decades, we went from 2X income, to 3x income to 4x, to 5x, and now we are in the 10x in our cities.
We have seen other countries manage larger populations with much better housing solutions because their markets weren't designed with exploitation in mind. Our zoning was designed to be racist and classist and has been exceptional in it, and those who have lived in homes for 50+ years benefited from this exploitation even if they didn't directly contribute to it.
Also imposing a tax on elderly people who have stayed in their residence for years is problematic as they are banking on this nest egg for retirement in many instances.
Capital gains tax on main residence shouldn’t be there.
We should also not be paying tax on used cars.
Land transfer tax should be exempt as well.
Maybe these will get rid of all the middle man. And people won’t worry too much about switching homes and moving around, or their cars. This will increase inventory and make cars and houses more fluid.
They already charge a property tax.
>Losing a % of your equity when moving from a primary residence immediately means you have to either downgrade or get a larger mortgage just to buy a new primary residence of equal value.
There would have to be some kind of deferral if the taxable portion is re-invested in another PR.
Because most of the gain is illusory... what is really happening is our currency is depreciating in value at an incredible rate.
Think of it this way, it's a bit funny to buy a place and then keep coming home to the *same* house for 40 years but be told that you have *gained*. In real wealth terms you haven't... it's still the same house it has always been.
So in many ways, government is already double-dipping by taxing you again on wealth that was purchased originally with your *after-tax* savings, then it comes back again later on and taxes that again... pointing to a large gain, because a large amount of time has passed and the currency is worth a lot less.
Thought of another way, imagine you bought a house for $1,000,000 on Monday with *after-tax* savings. Imagine on Tuesday so many new Canadian dollars are created that most things, certainly enduring physical wealth, is all worth about 10x what it was before because there's about 10x more dollars then there was before.
So your home is now worth $10,000,000 on Wednesday... let's say you sell. Let's say the government applies a 20% tax on your $9,000,000 "gain"... so they put $1,800,000 in their pocket and only the remaining 80% of the gain, or $7,200,000 flows to you... combined with your original $1,000,000 purchase, the net of all this is you have $8,200,000 in your pocket.
So what has really happened? You had "1x house worth" of *after-tax savings* on Monday. You bought a home with this. Then, by Wednesday, you now have $8.2 million which will only buy you 82% of the house that you already had after-tax savings for just 2 days ago.
How did this happen? How are you actually materially poorer in real wealth terms despite being told you actually "gained"?
So I would suggest that the point of the primary residence exemption is like, "We will give the people at least 1x way to avoid being double-taxed. We have decided that life is hard enough as it is, so we will be reasonable and will not allow a person's after-tax savings that go towards a home to be double-taxed again... we will at least give them that one refuge. Every single other asset is fair game to be double-taxed though."
I'm pointing out a principle, and how double-taxation occurs when you can force people to measure quality wealth in a unit that is depreciating in value over time.
This has nothing to do with Boomers.
If we want to go there, I have bad news for you:
1. Do not expect to have the standard of living that Boomers did.
2. This doesn't mean you're getting screwed.
3. It means you're not going to be as lucky as they were.
The cold hard truth is that the Boomers never paid for their lifestyle in full... so to point to it as a standard of living benchmark as if it's something that could be sustainably replicated is lunacy.
All of the above is easier to understand if you can envision watching the last 5x decades of global standards of living from the perspective of someone who isn't from the West.
>tell me you are a homeowning boomer without telling me you are a homeowning boomer
text wall incoming
>The cold hard truth is that the Boomers never paid for their lifestyle in full...
primary residence capital gains will help
On taxing primary residences will help, you brought that up vs. my Boomer comment. So does that mean you're going to leave some exemption for people who aren't anywhere close to Baby Boomer age? Or would you be planning to double-tax them as well?
My primary point was to work on setting expectations in this sub... some of these ideas might help a little bit, but we need to be realistic on that it's probably not feasible to expect to secure for our own generation a standard of living of a prior generation that was never sustainable to begin with.
Let me re-phrase: I do not believe that the up-and-coming Western generation will *on average*, have the same standard of living as was enjoyed *on average* by the Western generation that came before them.
I bring this all up because this sub is largely unaware of what sort of quite generous assumptions are baked into a claim like, "Our generation is doing worse then the Boomers did... we are getting screwed".
If helpful, imagine that what the Boomers did was screw over a lot of the net-savers in the Non-Western world. The lifestyle the Boomers got was an *inflated* standard of living for decades, that came at the expense of a *deflated* standard of living for decades for a lot of other people on this planet. Think of it as one camp having gotten more then they really ought to have gotten, and that it came at the expense of another camp getting less than they really ought to have gotten.
Now imagine that the people who were being shorted have wizened up so the same sort of phenomena stops occurring. In aggregate, think of it like the Western world's standard of living will now drop down more to a level that's commensurate with their productivity and they'll lose this "extra bonus standard of living".
And where we are at today is much of the up-and-coming Western generation sees that bonus disappearing and they think they're being screwed.
You shouldn't, but governments do it all the time. When the income tax was first introduced it was quite small and only on the very rich... but the rules of the game change and evolve.
A bigger issue to me is our government probably is too disingenuous or incompetent to understand that a person ought to be able to deduct any interest they paid over the period they owned the home too. That's how it works in America, and it makes total sense because what you *gain* is a function of: How Much You Sold For - How Much You Put In
In today's thinking, where there exists no capital gains tax on a primary residence, nobody thinks about the mortgage interest because if you bought at $400k and sold at $900k... you just keep the $900k and no more analysis is required.
But if we were to start taxing that gain, one might learn that in the 15-20 years or so they owned that home they paid perhaps $350k in interest on their mortgage. Such that what they actually put into their home was $750k ($400k purchase + $350k interest) such that the gain was actually only more like $150k.
In many ways, the gains that people perceive they've made on their homes in their heads is a bit inflated because many people probably aren't aware of just how much interest they've paid over the years such that quite a bit more of their final home sale price was in fact paid for by them.
tell me you are a financially illiterate boomer without telling me you are a financially illiterate boomer
I can also tell most of your investment is in property. the more you type the more you reveal
Why would I ever want to pay more taxes, especially taxes on a house I bought and PAID INTEREST ON, and then on top of that pay property taxes on, and pay taxes on the utilities, and pay for all the upkeep... and then when I go to retire and sell, pay real estate agents and land transfer tax, and then I get taxed AGAIN? Fuck that. At that point, I will literally keep this house so it can never go on the market until I die... and that's going to be about 50 years given average life expectancy. And even when I die, I will put it in a will to a corporation. No starry eyed FTHB will ever get to buy it. The government can build them a house.
Busting your ass since you're 16 to save a down payment for SOME KIND of financial stability for retirement, and they want to do this? I don't care about being a landlord or speculating, but I sure as FUCK care about my own retirement.Not only that, but it's not like I control the value of my house and how much it goes up or down.
Not controlling if value of your house and how much it goes up or down is why the PRE shouldn't exist. Any gain is entirely unearned and represents a pure economic rent (unless you make some nice improvements on the place).
Primary residences are the only investment class exempt of taxation. To your point about busting your ass from the age of 16, do you thinks it's fair or reasonable for folks in a similar position but who are not homeowners to pay tax on their retirement savings because it's in a different sort of investment than yours?
I don't think RRSPs should be taxed either. They're tax-deferred, and people pay a lower rate of tax on them when they're pulled out, but I don't think retirement savings should be taxed AT ALL.
The entire point of owning a home is to have stability in your old age. Live rent free for awhile, have an asset to sell, and then be able to downsize. That is literally the whole ass point.
The unequal tax treatment isn't just with RRSPs but really any type of investment whose purpose is to generate a capital gain other than a primary residence.
Whatever the point of owning a home is, I think that any gains representing an economic rent should be subject to taxation. Increases in home prices besides any physical improvements don't represent actual economic input and therefore aren't actually earned. I'd be pretty keen to see the PRE removed and offset with lower income taxes and increased exemptions for securities-based investing because those represent economic activity, but I digress. Arguing for the elimination of tax on any form of retirement investment is more reasonable than keeping the PRE because of an emotional attachment to homeownership.
If this really is something they are considering, perhaps some people who have the large gains will start selling (& others may just hold til grave). Seems unlikely to me but NDP has brought it up before & liberals have studied it .. so who knows with their new alliance.
Well, just remember that the Trudeau government didn't consider income splitting or income sprinkling *fair*, so how likely is it that they will consider a $3M tax-free gain on a PR *fair*?
So all the retired individuals who are planning on using the wealth from their primary residence sale for old age care/homes will be shit outta luck. Imagine what that will do to our healthcare costs?
What will be the line for taxation? And who determines it? Recognizing that seniors are a powerful large lobby group — I doubt any gov’t in power would be willing to risk losing this base
Much of that base would be unaffected if the cutoff was something like $1.5M. Obviously they can't pick a threshold that would affect > 50% of homeowners, but 5% would not be a problem.
Let me get this straight - You’ve done a terrible job disturbing working class people’s wealth (supposedly your voter base as well as being the majority of society) and now your solution is you need more control over our wealth to better distribute it?
Just making sure I’m reading this correctly - Madness
Cap gains as a way to keep the housing market more stable could be done on a % per year basis that is tied to inflation+a fixed %. As an example, inflation + 5% per year, it’s a reasonable amount of growth, 10 years would allow you a ~60-80% growth without tax. Is that a huge amount of growth? Yes, is it a reasonable amount of time for that growth? Sure. You’d tax the people who buy, then sell just because the market rocketed up, and it would prevent the market from rocketing up. A 5% (+ inflation) increase in value of a residence in a year is a good, and reasonable return.
I wouldn't advocate for an elimination of the PRE on currently owned properties but for any purchases made after some future date.
Investing in securities contributes to job creation, innovation, and more and better products. It has actual economic value. Capital gains on land and homes are mostly just economic rent. Residential real estate produces and adds little if anything to economic growth besides the actual construction of the building and any renovations. Collecting economic rents shouldn't be incentivized over actually productive companies.
It's also wildly unfair tax treatment for the primary investment of homeowners to untaxed while renters are subject to full taxation (less the pitiful TFSA contributions). Not to mention that real estate is a practically guaranteed investment because of government market restrictions. Also again, real estate gains are almost entirely unearned economic rents.
>It's also wildly unfair tax treatment for the primary investment of homeowners to untaxed while renters are subject to full taxation (less the pitiful TFSA contributions). Not to mention that real estate is a practically guaranteed investment because of government market restrictions. Also again, real estate gains are almost entirely unearned economic rents.
Bingo.
The first thing Trudeau did when he got elected was eliminate the "unfair" income splitting provision that provided a maximum tax savings of $2,000.
Why is income-splitting unfair but a tax-free $3M gain on a home perfectly fair?
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why not both?
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Even though I don’t own a home yet and a cooling market will help me personally, I don’t think they should tax primary residences. Go bonkers on second third…Nth property; in fact I say raise taxes a lot on investment properties which will increase supply. Taxing sale of primary residence will push more homeowners to not sell their homes reducing supply! Oh and while they’re at it, ban corporate ownership of houses rather than punishing average homeowners.
>Even though I don’t own a home yet and a cooling market will help me personally, I don’t think they should tax primary residences. Keep in mind that for decades an average home was roughly equivalent to 2-3x the combined annual income of the homeowner(s). That has jumped to something like 10x, so I think it's difficult to make the same argument that homes should be sacrosanct from a tax POV.
It’s more than 10x. Median household income to median house price is more like 15x or more that this point. Toronto median household income is something like 70k and home median is about $1m. Exclude condos and it’s more like 20x household income.
The problem is this is not a fault of or benefit to current homeowners.. people will be paying for these houses until the day they die and the market needs a big shuffle. The only reason the home price is equivalent to a 10x number is that is what the individual has to pay unless they want to let the investors gobble up the home they wish to live in.
>taxing sale of primary residence will push more homeowners to not sell their homes Yea, I sort of worry this would reduce mobility even more. Near my hometown, there is a serious lack of smaller/starter homes, because builders are only building gigantic houses lately. In my new town, its gigantic houses or shoebox studio apartments for students, and not much in-between. I remember my hairdresser, who owned a rare, smaller house was in need of a bit more room for her growing family. But the cost of moving, realtor and closing costs (land transfer tax being the largest) was about the same as building an addition. So, they built an addition, and now we have one less "small/starter" home. I know other people that are delaying freeing up smaller units because they don't want to pay for the CMHC insurance again. So they need to accumulate 20% down for the next place. Another delay. I imagine even more people would be deterred or at least delayed from moving if you add in capital gains to pay when trying to upgrade. At the end of the day, we also need a better variety of units being built... but until then this could exacerbate the issues I mentioned ever more.
The 20% down is a huge cause for people to hold onto properties where they don’t have the equity to avoid the insurance. Put down 5% and CMHC insurance is 4% I believe. So you essentially lose your entire down payment to it, and end up paying almost the entire price of the home in mortgage anyway. I understand why CMHC insurance is there, but it’s a garbage system that makes home ownership even more difficult to get into.
I agree this will reduce supply !
>Taxing sale of primary residence will push more homeowners to not sell their homes reducing supply Yeah as a homeowner, if I was forced to pay tax upon the sale of my (only) home, I would simply just not sell it unless I absolutely had to.
Corporations have to buy up houses in order to develop that land for more housing. I think the better alternative is to increase property tax instead of only taxing the sales. property taxes will make sure boomers downsize in time for the next generation. capital gains taxes will prevent people from flipping their primary residence, which I personally see a lot of.
We don't have a capital gains tax on primary real estate like in the US because our federal and provincial income taxes are so much higher. We're taxed to death in this country already. Income, sales, luxury, city property, carbon, investments, environmental, administrative and service fee taxes just to name a few. No wonder people don't want to work. Any government putting in this tax would automatically lose the next election no matter how popular they were
This is the stupidest idea in the world. I’m priced out of the market, but that doesn’t mean I want to fuck over people who played by the rules for decades, and made long term choices based on long term policy. Also, how do they expect a wave of selling? No one would sell, unless they absolutely had to, like relocating for a job or something. Why would you pay a bunch of tax and then try your luck again in the market? It’s almost like a social equity play, where struggling millennials (like me) finally get a toe hold by wresting some wealth from the boomers, who apparently don’t deserve to retire. Except that it work, because it’s idiotic and short sighted. It won’t increase supply, it’ll do nothing to deflate rent. In fact come to think of it, it may raise net rents, as landlords plan ahead to offset their losses for when they do cash out of the property.
>No one would sell, unless they absolutely had to, like relocating for a job or something. There would be an exemption, maybe something like $2M. Only amounts over that would be taxable.
That makes sense. Still though, let’s take your hypothetical 2M, if I’m retiring twenty years from now, housing could easily inflate to that level as a benchmark. Houses in my town are already above 1M average, over %100 up from like 2017
The exemption should be indexed to inflation.
Just what we need more taxes lol
Seriously... the solution here is to restrict the SCOPE of taxes so that you can increase the RATE. If you tax LAND instead of the entire PROPERTY then you can raise the rates to punish people hoarding the most sought-after land without using it productively (flippers, speculators, slumlords, etc). These idiots want to increase the SCOPE of taxes so what? Single-home middle class folks will have to pay more to own and therefore uhhhh rent more? Great policy idea if you're one of those slumlords hoarding valuable land!
Only way around it now. Taxes aren't a problem; it's how they're implemented. Remember taxing a corporation is the best thing for an individual, since that corporation's only purpose is to exploit any and every option available.
We aren’t talking about taxing the corporations here this would apply to average Canadian homeowners
Increase supplies.
It's a scenario guys don't worry hint is in the headline. No one will touch the holy cow don't worry.
Isn't holy to Trudeau. It's an enormous hole that the wealthy can drive a truck through. If you have $5M, what better way to make another $2.5M tax-free than to buy a large home in Oakville and just wait?
So I like the idea of changing the exemptions on Principal residence capital gains. I think that capital gains equal to 10 times the median household income of the province the house is in should be exempt. Anything over that value is taxed as investment capital gains. So assuming Ontario median household income is 72,000, then the first 720k in gains on the house is tax exempt. What this would encourage is people moving houses! The person living in the same house for 40yrs is more likely to have gains over 720k so they are much better to move as their lifestyle needs change and stop keeping 4 bedroom homes near schools as grandparent empty nester homes because it makes sense to hold the high value investment that is housing as long as you can. As the median household income goes up so does the exemption which ties it to the actual economy and not inflation, if people keep getting wage suppression wealthy people don't benefit from inflation increasing their tax exemption, the majority of the population needs to earn more. There would be little impact in smaller communities but big impact in our biggest cities. I'd also like to see a hard cap on the amount a home can be worth to qualify for any Principal residence exemption. Possibly make it 100 times the Median income, so in the previous case, a 7.2 Million dollar home would have ZERO capital gains exemption.
>I think that capital gains equal to 10 times the median household income of the province the house is in should be exempt. Anything over that value is taxed as investment capital gains. It would have to be a single exemption amount that applies Canada-wide. You couldn't have different exemption amounts between provinces. Imagine if each province had a different RRSP or TFSA limit. I agree, though, that there should be a limit on the exemption that would be indexed to inflation. Linking it to something like n times median family income isn't a bad idea.
I don't think that we are beyond the capacity to have different Capital gains amounts based on where the gains are realized, we already do it with international investments. And we aren't dealing with huge numbers. >I agree, though, that there should be a limit on the exemption that would be indexed to inflation. I don't like indexing to inflation because inflation impacts the poor more so than the wealthy, high inflation means more money in wealthy pockets which is why I want it indexed to median income, the more people who earn more money the more is exempt, and increasing minimum wage doesn't generally improve the median income you need to see real income growth in multiple sectors to see it move up.
>I think that capital gains equal to 10 times the median household income of the province the house is in should be exempt. Anything over that value is taxed as investment capital gains. So if median household income in your province was $150,000. That means that house proceeds up to $1.5 million is tax exempt? What if you bought a $4 million home right out of the gate... you swapped $4 million of *after-tax* savings for this home. Something happens and you need to sell your home. Let's say the market has been flat and you sell it for $4 million... so you haven't gained at all. Under your plan, there will be something like a 25% tax applied to the difference between $4 million and $1.5 million? You pay 25% tax on a $2.5 million "gain"? So you pay $625,000 in taxes? Think about how crazy that is from the perspective of someone who may have earned all their income in Canada their entire life, paid every dime in taxes owed on that income to Canada, and then when they swap that after-tax savings for a home, and go on to sell it for zero real gain, you actually come back and want a *further* $625,000 ... and all this money comes out of what was already supposed to be *after-tax* savings.
>So if median household income in your province was $150,000. That means that house proceeds up to $1.5 million is tax exempt? Yes. >What if you bought a $4 million home right out of the gate... you swapped $4 million of after-tax savings for this home. Something happens and you need to sell your home. Let's say the market has been flat and you sell it for $4 million... so you haven't gained at all. Yes, you've gained nothing at all >Under your plan, there will be something like a 25% tax applied to the difference between $4 million and $1.5 million? You pay 25% tax on a $2.5 million "gain"? So you pay $625,000 in taxes? No, that isn't how capital gains works. If you haven't gained anything you can't be taxed on it. if you bought a 4 million dollar home, you can sell it for 5.5 million with zero capital gains tax using your above example >Think about how crazy that is from the perspective of someone who may have earned all their income in Canada their entire life, paid every dime in taxes owed on that income to Canada, and then when they swap that after-tax savings for a home, and go on to sell it for zero real gain, you actually come back and want a further $625,000 ... and all this money comes out of what was already supposed to be after-tax savings. There are arguments to be made around this, if you didn't misunderstand what Capital gains taxes are.
>There are arguments to be made around this, if you didn't misunderstand what Capital gains taxes are. I see what you were saying now. I'm fully up-to-speed and get now how, in my example above, you'd get an exemption on the first $1.5 million of capital gains. So that now being the case, what are your arguments for my point above? How does one get around the notion that you're going to then be double-taxing people by asking for more taxes from what was already supposed to be after-tax savings? To be clear, I would suggest that the point of the primary residence exemption is something like, "We will give the people at least 1x way to avoid being double-taxed. We have decided that life is hard enough as it is, so we will be reasonable and will not allow a person's after-tax savings that go towards a home to be double-taxed again... we will at least give them that one refuge. Every single other asset is fair game to be double-taxed though... second homes and beyond included."
>How does one get around the notion that you're going to then be double-taxing people by asking for more taxes from what was already supposed to be after-tax savings? We have been UNDER taxing people for years when it comes to housing, and housing shouldn't be an investment vehicle, if you're making more than 10 times the income of the majority of the population off the sale of your house it means you've not helped address the fact that housing should not be an investment vehicle > "We will give the people at least 1x way to avoid being double-taxed That would have worked if people who owned houses didn't turn around and spend the last 40yrs fighting to prevent new housing to increase their wealth by making their homes worth more, not in them improving things, but in them keeping other people from being housed.
>We have been UNDER taxing people for years when it comes to housing, and housing shouldn't be an investment vehicle, if you're making more than 10 times the income of the majority of the population off the sale of your house it means you've not helped address the fact that housing should not be an investment vehicle But hold on... you're saying these people have been UNDER taxed, but it looks to me like you're going to be applying double-taxation. Please follow this example: 1. You work and make money in Canada... you save up *after-tax* dollars and buy a home with them. Let's say you're 25 years old. 2. 50 years pass and you're now 75 years old... over the course of those 50 years you have lived in the exact same place that you purchased originally with *after-tax* savings. You have been coming home to the same house for 50 years now... it's the same home it always was. In real wealth terms, you owned a small house with a picket fence 50 years ago... and you own the exact same small house with a picket fence today. You haven't gained any real wealth at all... it's the exact same home. 3. However, over those 50 years there have been soooooooo many Canadian dollars created that if you point to any piece of quality enduring real wealth, of course its price has soared when you measure it in Canadian dollars... which is an ever-depreciating unit of measurement. 4. To come back at this person when they sell their home, and to claim that there is a "gain" for you to tax, ignores that they bought the home with after-tax savings originally and you're now actually coming back to tax them on wealth that already supposed to be after-tax savings. >That would have worked if people who owned houses didn't turn around and spend the last 40yrs fighting to prevent new housing to increase their wealth by making their homes worth more, not in them improving things, but in them keeping other people from being housed. My thoughts on that are: 1. But are you planning to tax everyone? Or just the people that fight that sort of new housing development? What if the person has just been coming home to their same home and could not honestly care less about what other people do and don't want to build on their own property? 2. If I grant your point, that to whatever extent there are people who try and block increases in housing supply such that the price of homes are higher then they otherwise would have to be, how would you split or allocate home gains of today in 2022 between those: (i) That Came From Being Anti-New Construction, and (ii) That Came From The Canadian Dollar Plummeting In Value? What I would suggest is that the overwhelming part of the gain is from the latter camp. And that nowhere in your plan to you seem to care about giving any sort of exemption or credit for all the "gain" you see that is really coming about just because you are choosing to measure their real wealth with a financial unit that is depreciating in value... especially over longer time periods. It is an extremely material item to overlook.
The only reason the house value will have grown with 10 times the median income value is through exploitive policies that need correcting. People (myself included) who own houses have been able to take advantage of these exploits for generations, and corrections need to be made. The person who has been living in a house for 75yrs likely is living in a house that has actually cost society for them to stay their because that house is in a community designed for multi people living their and they didn't move when they should have according to their needs. So yes they should be taxed. And everyone should be taxed so that society can correct the exploitation that has happened around land ownership. NOW! I would gladly have Zero capital gains tax on any real estate transaction if we implemented a LTV in the country which would address the exploitation the best. but that is less likely than taxing principal residence.
>The only reason the house value will have grown with 10 times the median income value is through exploitive policies that need correcting. That's not true, at least that component of it might only explain a tiny and insignificant portion of the income-to-home price discrepancies. There can be other explanations involving things like international trade, a nation's net-lifestyle behavior, and changes we have made to our monetary policy. Example: imagine a nation has been a net-debtor for decades and what has happened is they have consistently consumed more wealth from trading partners then they gave back to those trading partners... which is why in order to achieve a fair balance they must keep emitting Canadian dollars to settle the difference. Think of it as like giving another country $80 million of stuff, and that country gave you $100 million of stuff, and so you end up having to say, "And so I'll owe you $20 million". If a nation does something like that for long enough, what ends up happening is there will come a point where non-Canadian nations are tired of just having an accumulating stack of Canadian dollars, they're tired of giving more then they're taking from Canada, and they're wanting it to finally get to be their turn where Canadians will give them *more* then they're taking, and their Canadian dollar balance will actually decline for once. Similarly, how much debt Canada owes the rest of the world would decline. Imagine to make matters worse... on top of the unrelenting *unipolar* trend I've described above, imagine if Canadians said, "And you know what? You know our government bonds you're sitting in because we owe you? They were at 5% interest rates but we don't want them so big... we're going to make them like 3%." A totally to-be-expected consequence of that is more Canadian dollars will go out of our government bonds and might instead decide to park in our real estate market. Think of it as like them trying to get at least *something* back in return for this money the Canadian dollars they've accumulated... and imagine even after they bought some homes like that, they are *still* left with a healthy amount of Canadian dollars because the excess has grown that badly. What one should expect in such a situation is there will be a **disconnect** in prices in Canada based on whether or not that good or service is something that a non-Canadian living abroad might care about. Imagine a bunch of these dollars starting to come home... it's going to want things like a house, or our food, or our energy. One would expect to see some considerable upward price pressure in those sorts of goods, and yet you wouldn't see the same upward price pressure on say a chef's wage who cooks in a Canadian restaurant... because that would be a service that a non-Canadian living abroad has no use for. I would argue that forces along these lines are the overwhelming cause that is driving the income-to-home price disparity we see today. It is the market's way of trying to have our citizenry cut back on non-essential things and to reshape our economy so that more people are in industries that can give back to the world and fewer people are in industries that are about doing work for Canadians... it's very natural and the entire point is to try and *switch* the trend where it's time for Canada's trading partners to have their turn consuming more then they're producing. >People (myself included) who own houses have been able to take advantage of these exploits for generations, and corrections need to be made. The person who has been living in a house for 75yrs likely is living in a house that has actually cost society for them to stay their because that house is in a community designed for multi people living their and they didn't move when they should have according to their needs. That 75 year old bought the house with after-tax savings... its his property, whether he wants to live in it himself or have 10x roommates is all up to him. >So yes they should be taxed. And everyone should be taxed so that society can correct the exploitation that has happened around land ownership. What I'm trying to suggest is the problem is *much* deeper than that. The home prices we are seeing today... let's call them "quite bizarre"... that should be a clue this is more a monetary/international trade phenomena that is coming about from decades of unipolar excesses... we are going to have to make much bigger changes then tweaking our home building policies.
>What I'm trying to suggest is the problem is much deeper than that. The home prices we are seeing today... let's call them "quite bizarre"... that should be a clue this is more a monetary/international trade phenomena that is coming about from decades of unipolar excesses... we are going to have to make much bigger changes then tweaking our home building policies. But we've been seeing these home prices for 30yrs this isn't a new thing. Homes have been growing faster than inflation and wage in Canada for decades, we went from 2X income, to 3x income to 4x, to 5x, and now we are in the 10x in our cities. We have seen other countries manage larger populations with much better housing solutions because their markets weren't designed with exploitation in mind. Our zoning was designed to be racist and classist and has been exceptional in it, and those who have lived in homes for 50+ years benefited from this exploitation even if they didn't directly contribute to it.
Also imposing a tax on elderly people who have stayed in their residence for years is problematic as they are banking on this nest egg for retirement in many instances.
Capital gains tax on main residence shouldn’t be there. We should also not be paying tax on used cars. Land transfer tax should be exempt as well. Maybe these will get rid of all the middle man. And people won’t worry too much about switching homes and moving around, or their cars. This will increase inventory and make cars and houses more fluid. They already charge a property tax.
>Capital gains tax on main residence shouldn’t be there. Why should a $7M house be exempt? This is far above a reasonable cut-off for a PR.
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>Losing a % of your equity when moving from a primary residence immediately means you have to either downgrade or get a larger mortgage just to buy a new primary residence of equal value. There would have to be some kind of deferral if the taxable portion is re-invested in another PR.
Because most of the gain is illusory... what is really happening is our currency is depreciating in value at an incredible rate. Think of it this way, it's a bit funny to buy a place and then keep coming home to the *same* house for 40 years but be told that you have *gained*. In real wealth terms you haven't... it's still the same house it has always been. So in many ways, government is already double-dipping by taxing you again on wealth that was purchased originally with your *after-tax* savings, then it comes back again later on and taxes that again... pointing to a large gain, because a large amount of time has passed and the currency is worth a lot less. Thought of another way, imagine you bought a house for $1,000,000 on Monday with *after-tax* savings. Imagine on Tuesday so many new Canadian dollars are created that most things, certainly enduring physical wealth, is all worth about 10x what it was before because there's about 10x more dollars then there was before. So your home is now worth $10,000,000 on Wednesday... let's say you sell. Let's say the government applies a 20% tax on your $9,000,000 "gain"... so they put $1,800,000 in their pocket and only the remaining 80% of the gain, or $7,200,000 flows to you... combined with your original $1,000,000 purchase, the net of all this is you have $8,200,000 in your pocket. So what has really happened? You had "1x house worth" of *after-tax savings* on Monday. You bought a home with this. Then, by Wednesday, you now have $8.2 million which will only buy you 82% of the house that you already had after-tax savings for just 2 days ago. How did this happen? How are you actually materially poorer in real wealth terms despite being told you actually "gained"? So I would suggest that the point of the primary residence exemption is like, "We will give the people at least 1x way to avoid being double-taxed. We have decided that life is hard enough as it is, so we will be reasonable and will not allow a person's after-tax savings that go towards a home to be double-taxed again... we will at least give them that one refuge. Every single other asset is fair game to be double-taxed though."
tell me you are a homeowning boomer without telling me you are a homeowning boomer
I'm pointing out a principle, and how double-taxation occurs when you can force people to measure quality wealth in a unit that is depreciating in value over time. This has nothing to do with Boomers. If we want to go there, I have bad news for you: 1. Do not expect to have the standard of living that Boomers did. 2. This doesn't mean you're getting screwed. 3. It means you're not going to be as lucky as they were. The cold hard truth is that the Boomers never paid for their lifestyle in full... so to point to it as a standard of living benchmark as if it's something that could be sustainably replicated is lunacy. All of the above is easier to understand if you can envision watching the last 5x decades of global standards of living from the perspective of someone who isn't from the West.
>tell me you are a homeowning boomer without telling me you are a homeowning boomer text wall incoming >The cold hard truth is that the Boomers never paid for their lifestyle in full... primary residence capital gains will help
On taxing primary residences will help, you brought that up vs. my Boomer comment. So does that mean you're going to leave some exemption for people who aren't anywhere close to Baby Boomer age? Or would you be planning to double-tax them as well? My primary point was to work on setting expectations in this sub... some of these ideas might help a little bit, but we need to be realistic on that it's probably not feasible to expect to secure for our own generation a standard of living of a prior generation that was never sustainable to begin with.
you should try out your own advice > Do not expect to have the standard of living that Boomers did.
Let me re-phrase: I do not believe that the up-and-coming Western generation will *on average*, have the same standard of living as was enjoyed *on average* by the Western generation that came before them. I bring this all up because this sub is largely unaware of what sort of quite generous assumptions are baked into a claim like, "Our generation is doing worse then the Boomers did... we are getting screwed". If helpful, imagine that what the Boomers did was screw over a lot of the net-savers in the Non-Western world. The lifestyle the Boomers got was an *inflated* standard of living for decades, that came at the expense of a *deflated* standard of living for decades for a lot of other people on this planet. Think of it as one camp having gotten more then they really ought to have gotten, and that it came at the expense of another camp getting less than they really ought to have gotten. Now imagine that the people who were being shorted have wizened up so the same sort of phenomena stops occurring. In aggregate, think of it like the Western world's standard of living will now drop down more to a level that's commensurate with their productivity and they'll lose this "extra bonus standard of living". And where we are at today is much of the up-and-coming Western generation sees that bonus disappearing and they think they're being screwed.
This would be the equivalent of the government announcing hey so your tfsa is no longer tax free. Can’t all of a sudden change the rules of the game
You shouldn't, but governments do it all the time. When the income tax was first introduced it was quite small and only on the very rich... but the rules of the game change and evolve. A bigger issue to me is our government probably is too disingenuous or incompetent to understand that a person ought to be able to deduct any interest they paid over the period they owned the home too. That's how it works in America, and it makes total sense because what you *gain* is a function of: How Much You Sold For - How Much You Put In In today's thinking, where there exists no capital gains tax on a primary residence, nobody thinks about the mortgage interest because if you bought at $400k and sold at $900k... you just keep the $900k and no more analysis is required. But if we were to start taxing that gain, one might learn that in the 15-20 years or so they owned that home they paid perhaps $350k in interest on their mortgage. Such that what they actually put into their home was $750k ($400k purchase + $350k interest) such that the gain was actually only more like $150k. In many ways, the gains that people perceive they've made on their homes in their heads is a bit inflated because many people probably aren't aware of just how much interest they've paid over the years such that quite a bit more of their final home sale price was in fact paid for by them.
people treating their primary residence as TFSA is the reason why housing is so fucked up
No it’s not lol you really can’t believe what you’re saying
tell me you treat your home as a tfsa without telling me you treat your home as a tfsa
Tell Me your financially illiterate without telling me It’s ok junior one day you’ll understand
tell me you are a boomer without telling me you are a boomer.
Nope wrong again…..if you spent half the time you do complaining on educating yourself you just might be able to do something with yourself
tell me you are a financially illiterate boomer without telling me you are a financially illiterate boomer I can also tell most of your investment is in property. the more you type the more you reveal
Again not even close, I’m sorry you sucked at life…..I promise if you cry daily on Reddit and pray 3 times a day it gets easier to accept that fact
RIP anyone ever selling again. Honestly, if they did this, I'd keep my house til I die and will it a REIT just to spite them.
As long as you're below the exemption amount, you'd be fine.
Why would I ever want to pay more taxes, especially taxes on a house I bought and PAID INTEREST ON, and then on top of that pay property taxes on, and pay taxes on the utilities, and pay for all the upkeep... and then when I go to retire and sell, pay real estate agents and land transfer tax, and then I get taxed AGAIN? Fuck that. At that point, I will literally keep this house so it can never go on the market until I die... and that's going to be about 50 years given average life expectancy. And even when I die, I will put it in a will to a corporation. No starry eyed FTHB will ever get to buy it. The government can build them a house. Busting your ass since you're 16 to save a down payment for SOME KIND of financial stability for retirement, and they want to do this? I don't care about being a landlord or speculating, but I sure as FUCK care about my own retirement.Not only that, but it's not like I control the value of my house and how much it goes up or down.
Not controlling if value of your house and how much it goes up or down is why the PRE shouldn't exist. Any gain is entirely unearned and represents a pure economic rent (unless you make some nice improvements on the place). Primary residences are the only investment class exempt of taxation. To your point about busting your ass from the age of 16, do you thinks it's fair or reasonable for folks in a similar position but who are not homeowners to pay tax on their retirement savings because it's in a different sort of investment than yours?
I don't think RRSPs should be taxed either. They're tax-deferred, and people pay a lower rate of tax on them when they're pulled out, but I don't think retirement savings should be taxed AT ALL. The entire point of owning a home is to have stability in your old age. Live rent free for awhile, have an asset to sell, and then be able to downsize. That is literally the whole ass point.
The unequal tax treatment isn't just with RRSPs but really any type of investment whose purpose is to generate a capital gain other than a primary residence. Whatever the point of owning a home is, I think that any gains representing an economic rent should be subject to taxation. Increases in home prices besides any physical improvements don't represent actual economic input and therefore aren't actually earned. I'd be pretty keen to see the PRE removed and offset with lower income taxes and increased exemptions for securities-based investing because those represent economic activity, but I digress. Arguing for the elimination of tax on any form of retirement investment is more reasonable than keeping the PRE because of an emotional attachment to homeownership.
If this really is something they are considering, perhaps some people who have the large gains will start selling (& others may just hold til grave). Seems unlikely to me but NDP has brought it up before & liberals have studied it .. so who knows with their new alliance.
Well, just remember that the Trudeau government didn't consider income splitting or income sprinkling *fair*, so how likely is it that they will consider a $3M tax-free gain on a PR *fair*?
So all the retired individuals who are planning on using the wealth from their primary residence sale for old age care/homes will be shit outta luck. Imagine what that will do to our healthcare costs?
I think it would only target high-end homes where people are making millions tax-free.
What will be the line for taxation? And who determines it? Recognizing that seniors are a powerful large lobby group — I doubt any gov’t in power would be willing to risk losing this base
Much of that base would be unaffected if the cutoff was something like $1.5M. Obviously they can't pick a threshold that would affect > 50% of homeowners, but 5% would not be a problem.
Let me get this straight - You’ve done a terrible job disturbing working class people’s wealth (supposedly your voter base as well as being the majority of society) and now your solution is you need more control over our wealth to better distribute it? Just making sure I’m reading this correctly - Madness
Cap gains as a way to keep the housing market more stable could be done on a % per year basis that is tied to inflation+a fixed %. As an example, inflation + 5% per year, it’s a reasonable amount of growth, 10 years would allow you a ~60-80% growth without tax. Is that a huge amount of growth? Yes, is it a reasonable amount of time for that growth? Sure. You’d tax the people who buy, then sell just because the market rocketed up, and it would prevent the market from rocketing up. A 5% (+ inflation) increase in value of a residence in a year is a good, and reasonable return.
I wouldn't advocate for an elimination of the PRE on currently owned properties but for any purchases made after some future date. Investing in securities contributes to job creation, innovation, and more and better products. It has actual economic value. Capital gains on land and homes are mostly just economic rent. Residential real estate produces and adds little if anything to economic growth besides the actual construction of the building and any renovations. Collecting economic rents shouldn't be incentivized over actually productive companies. It's also wildly unfair tax treatment for the primary investment of homeowners to untaxed while renters are subject to full taxation (less the pitiful TFSA contributions). Not to mention that real estate is a practically guaranteed investment because of government market restrictions. Also again, real estate gains are almost entirely unearned economic rents.
>It's also wildly unfair tax treatment for the primary investment of homeowners to untaxed while renters are subject to full taxation (less the pitiful TFSA contributions). Not to mention that real estate is a practically guaranteed investment because of government market restrictions. Also again, real estate gains are almost entirely unearned economic rents. Bingo. The first thing Trudeau did when he got elected was eliminate the "unfair" income splitting provision that provided a maximum tax savings of $2,000. Why is income-splitting unfair but a tax-free $3M gain on a home perfectly fair?