Canada

Canada Says It Will Not Tax Home Equity, After Industry Says They’ll “Shut Down” Talk

The Canadian government will not be taxing home equity — at least not under the current administration. Minister Ahmed Hussen, who oversees the country’s housing portfolio, said they will not entertain a tax on home equity, today. This comes after increasing calls from academics, and even banks, to consider doing so. It also comes just a few days after the industry said they would move to shut down any talk suggesting the country consider the option. 

Canada Will Not Tax Home Equity Under This Government

The Minister, who oversees the country’s housing policy, flat out said it’s not an option. They aren’t just not taxing, he made it clear they will not even consider it. “Our government is not thinking, or considering… or bringing a home equity tax,” said Minister Hussen in parliament. He followed with, “Any suggestion is false… we have clarified that a number of times.” 

The minister launched into a rant, to emphasize it will never happen while they’re in power. “… have clarified that a number of times. And I will keep saying that, over and over again. We are not considering that, and we are not implementing that..”  

Experts Have Been Increasingly Calling For A Capital Gains Tax

The statement follows calls to consider a home equity tax, from groups not typically into taxes. Last week the Globe’s editorial board urged the country to consider a capital gains tax. RBC, the country’s largest bank, even made a case to consider taxing capital gains. Both groups clarified it will be unpopular, but the issue is now beyond housing affordability. RBC went so far as to say home prices at this level can have a destabilizing effect on the whole economy.

Real Estate Industry Said They Will “Shut Down” Talk

Canada’s real estate industry hasn’t been so keen on the idea, arguing it’s unfair to homeowners. Last week TRREB, the country’s largest real estate board, sent an email to agents saying they will “shut down” the conversation. The email also mentions the support of other real estate associations, including CREA. The latter has over 130,000 members, and wields significant influence these days.

Canada isn’t alone in talk of home equity taxes, as real estate prices everywhere rise. While not as much as Canada, low interest rates are pushing other countries higher as well. France, New Zealand, and South Korea are just a handful of countries moving to tax home equity. The aim is to level the field with productive investment, by eliminating property tax advantages.

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23 Comments

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  • Iam*man 4 months ago

    I’m no expert but it seems taxing people on their sale of property would be counterintuitive that would probably mean that people won’t sell because they don’t want to be taxed which would create even less supply in the market which would then drive up house prices even more am I wrong?

    • SH 3 months ago

      You are wrong. Any family not selling out of fear of capital gains tax is removing one house from supply but also removing one family (prospective buyer) from demand.

      You do realize Canada is now virtually alone in the world in offering a massive unlimited tax shelter to homeowners?

    • Steve Kurrein 3 months ago

      I think there should be a capital gains tax on principal residences when the gain is out of all proportion to what is reasonable. Maybe allow a 15% per annum tax free gain and after that tax

  • Bernie Schutten 4 months ago

    How about taxing the Royal Bank with there surching profits they made from the mortgages they lent so we could build some equity.

  • Doomcouver 4 months ago

    “…it will never happen while they’re in power.“
    It’s nice of the Liberal government to invite us not to vote for them. Let’s see if any political parties actually take the bait and campaign on protecting Canada’s housing market from current and future irrationality. They’d get my vote.

    • Kath 4 months ago

      Indeed. I think they underestimate just how many Canadians (including home owners) are disgusted by the price of housing. Our kids have to live somewhere too.

    • SH 3 months ago

      With the right messaging it’s a sure winner but I don’t have much faith in the current crop of strategists. There are no James Carvilles or Mary Matalins in the backrooms of Canadians political parties these days.

      The Conservatives could also run on scaling back immigration until the unemployment rate is back to pre-Covid level, the housing crisis fades, and a massive new building program completed (with rules to restrict speculators in favour of end users and purpose-built rentals) to correct some of the fallout from the Liberals’ shifting housing responsibility to the provinces in the 90s. Ensure Canada works for Canadians before letting the world set up camp and push Canadians out of their own cities. Such a position would receive wide support. But they won’t do it, because they’re engaged in the same ethnic-vote buying game as the Liberals.

  • Holton 4 months ago

    The spike in home prices is not just in Canada. Its happening all over the world because all the governments printed so much money.

    They should have let prices drop last year, now its too late. They can only allow inflation to go higher to make housing cheaper relative to all other goods in 10 yrs.

  • leon 4 months ago

    you are already paying tax on home equity – it is called property tax. tax is a tax no matter who collects it.

    • SH 3 months ago

      Except that Canadian property taxes are extremely low compared to the US and in BC old people don’t even have to pay them until they sell or die (even then, there’s probably a loophole that gets them out of having to pay).

      Raise property taxes and lower income taxes. Reward productive work.

    • Oldguy 3 months ago

      I own a property in Canada and one in the US, and they have about the same market value. My property taxes on the property in Canada are about 15% ( that is not a typo) of my property taxes in the US. I’m not saying which is “right” but it is absurd to say that property taxes in Canada are high.

      • Rel 3 months ago

        Yes, except in the USA you get to write off the interest on your primary residence the entire time as well which you don’t get to do in Canada.

        Instead of adding even further taxes to Canadians how about they work on fiscal responsibility. Hell in BC a few years ago they introduced a luxury tax into the housing market. Except it is no longer a luxury tax you pay it regardless of what you’re buying and no one has bothered to adjust it. Why? Because once they get your money they become addicted to it and will never give it back.

        Housing is only appearing to spiral out of control because the gov’t is printing money with no plan on paying it back and it’s the best hedge against inflation that many of us have access to.

  • Ashley 3 months ago

    Home prices detached with incomes, do no good to the economy. Youth suffers as they are dependent on parents to fund their home. Middle class suffers as more income is stuck in mortgage payments. Home owners suffers as it becomes more expensive to upgrade. The benefiters are speculators, money launderers, criminals,.. Seems supporting such people has become the motto and brand of the government.

  • SH 3 months ago

    Fine. So what tax breaks will they give to renters to even the playing field? Or are renters permanently consigned to being second-class citizens in Canada?

    Would be nice if a single reporter in the useless Ottawa press gallery raised the issue.

    • Kath 3 months ago

      You are correct that there should be a tax-related incentive for being a renter, as opposed to being forced into renting because house prices are so high. Not only would this help with the growing inequity between renters and owners, but it might also lessen demand for real estate.

  • Ron 3 months ago

    TRREB is fighting toot and nail historical sale prices not to be publicly known. Trey want you to go there and bid blindly. Higher price higher commission. Bungol.ca has data suspended. I don’t see anything on House Sigma lately as well.
    Speculation is encouraged over productive work in current low interest environment.
    The current government will not shoot themselves in the foot by razing interest rates . So many people are in that mess . Wave of suicides will fallow.
    Factories are closing , condos an houses have been build . Second hand stores are popping up on every plaza.
    No idea how this all is going to end up , but I lived trough 7 years of hyper inflation and know that simple working people lost all their savings .
    What future our kids have ? What about the immigrants with little money coming here eager to work and realising at one point that it all goes for shelter , food , insurance , fees , taxes …

    • Average Man 3 months ago

      I am increasingly anti-immigration for the immigrants sake. Refugees, by all means, Canada is still better than being shot or bombed or languishing in a refugee camp, but economic immigrants? Seriously, turn around you guys. Stay home.

      We’d be doing you a favour not letting you in. If you’re someone who can get in on the points system, you’d probably do just as well staying in Hyderabad or Shanghai or Manila.

    • Ron 3 months ago

      Housesigma still works .I was wrong about it . My price range was to low 🙂

  • John 3 months ago

    I made a lot of financial sacrifices over the past 20 years in order to afford my home. It’s unfair for the government to change the rules of the tax game after I planned my entire life around them. If they do make changes I suggest they affect future home purchasers, not those from the past. That would be more fair.

    • SH 3 months ago

      The entire government bureaucracy exists to prop up the value of your home. It wouldn’t be unfair to you since your home would never have been worth so much without 20-30 years of government intervention. Renters sacrifice plenty in their lives too and they don’t get any equivalent tax shelter.

    • Gerry 3 months ago

      John:

      How about retired people who were told all their life that government bonds would pay them a safe 5% in retirement and they planned for 50 years accordingly.

      Today they are lucky if government bonds pay 1%. That rule changed and no one is compensating them for the 80% reduction in their income.

    • Kath 3 months ago

      So you knew 20 years ago that real estate prices were going to go into the stratosphere and homes were going to become unaffordable for young Canadians in the 2020’s? Wow, that is some crystal ball you had back then!

  • Leftover 3 months ago

    They might mean it because other things are possible:

    – 10 year treasury is creeping up to 2%, could be 3.5% by the end of 2021;
    – Legislate CREA to provide open, real time data and outlaw blind auctions; and
    – Enforce existing tax code to register any transaction on secondary residence as regular income including rent, Airbnb, flips and maybe even granny’s house when her estate gets settled

    Noe of these things requires new taxes and they’d all get votes (maybe not from 130,000 real estate agents, but who cares)

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