Real Estate

To Slow The Markets: Tax Principal Residences for Capital Gains

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  • Jun 11th, 2016 8:10 pm
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[OP]
Sr. Member
May 3, 2011
671 posts
90 upvotes

To Slow The Markets: Tax Principal Residences for Capital Gains

This tax exemption is no longer needed in overpriced housing. So when the owners do sell, they should pay the capital tax accumulated since purchase.
1.5 house sells for 2.025 in one year (35%).
Capital tax approx: 91875.
Selling fees: 60k
Still a sweet 375,000 profit and more money goes to Canadia.

or

600k house sells for 690k (15%)
Capital tax approx: 16k
Selling fees: 40k
Profit: 34k and more money goes to Canadia.
15 replies
Deal Addict
User avatar
Sep 23, 2014
1927 posts
561 upvotes
Toronto, ON
And what if supply completely dries up because people stopped selling altogether? Do you think new build will keep up with the demand?
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Deal Addict
Aug 20, 2007
1930 posts
707 upvotes
Kitchener
If they make principal dwellings applicable to capital gains then they would need to also allow for mortgage interest be deductible. The government can't have it both ways. In the US, you pay capital gains on your principal dwelling, but people can deduct their mortgage interest as well.
Deal Addict
User avatar
Jan 14, 2009
2434 posts
1419 upvotes
Vancouver, BC
Canadians already pay too much taxes. Cure is worse than the disease.
Jr. Member
Nov 11, 2013
100 posts
49 upvotes
Kitchener
They wouldn't do anything like that, because that would end up penalizing wealthy Canadian-born homeowners (read: politicians).
Deal Addict
Jan 31, 2016
1805 posts
1819 upvotes
Toronto, ON
Playing devils advocate here. Perhaps enforce a cap on number of principal residence exemptions that can be declared in a lifetime before cap gains kick in. Limit to 2? 3? 4? Any more than that and it becomes taxable.
Member
Sep 1, 2013
403 posts
96 upvotes
I would suggest the opposite. A two-part suggestion:

A. Subsidize the first-time home buyers with a credit against their taxes. The credit is phased in over a number of years and is nil if you sell the property within one year.

B. Require a minimum one year's residence in the province before becoming eligible to buy single-family housing. You can tweak this one to target specific markets or target eligibility for something else, such as getting a mortgage.
Deal Addict
User avatar
Mar 26, 2015
2573 posts
436 upvotes
BC
No disagree completely with this proposal. It's looking the wrong direction also and penalizes the wrong people.

The Governments just have to tackle the REAL issues:

1. Laundered money (WAKE UP FINTRAC)
2. Foreign speculation (WAKE UP PROVINCIAL AND FEDERAL GOVERNMENT)
3. CMHC (WAKE UP WHOEVER)
4. Subprime (WAKE UP PROVINCIAL AND FEDERAL GOVERNMENT)
5. Corruption (GET OUT CHRISTY CLARK AND GREGOR ROBERTSON - speaking for Vancouver)
Go Raptors, Go!
Deal Addict
Jul 21, 2007
1223 posts
122 upvotes
jimmyonishi wrote: This tax exemption is no longer needed in overpriced housing. So when the owners do sell, they should pay the capital tax accumulated since purchase.
1.5 house sells for 2.025 in one year (35%).
Capital tax approx: 91875.
Selling fees: 60k
Still a sweet 375,000 profit and more money goes to Canadia.

or

600k house sells for 690k (15%)
Capital tax approx: 16k
Selling fees: 40k
Profit: 34k and more money goes to Canadia.
All this will do is put more money to be wasted by the government.
Deal Guru
Feb 9, 2009
11161 posts
9635 upvotes
Whoever suggest cap gains is gonna be killed in the next election.

Like canucky1 said there are many other way to tackle this then stupid cap gains tax... its not gonna slow the foreigners, the money launders, the subprime and others...
Deal Addict
User avatar
Mar 26, 2015
2573 posts
436 upvotes
BC
Sanyo wrote: stupid cap gains tax... its not gonna slow the foreigners, the money launders, the subprime and others...
+1000
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Deal Fanatic
User avatar
Sep 8, 2007
9017 posts
10314 upvotes
Way Out of GTA
dotsandpixels wrote: Playing devils advocate here. Perhaps enforce a cap on number of principal residence exemptions that can be declared in a lifetime before cap gains kick in. Limit to 2? 3? 4? Any more than that and it becomes taxable.
Makes zero sense and accomplishes nothing. People need to get first house, then bigger house for family, move for work, downsize for retirement, etc. A whole lot of reasons to sell and then buy again none of which should disallow the exemption. Buy and selling RE didn't fuel this fire. Cheap money did.
Banned
Apr 27, 2016
88 posts
13 upvotes
So this guy wants to tax homeowners who had one principal residence through out their life the same as house flippers?

Frankly, I have never read anything more ridiculous.
Deal Addict
Jun 11, 2005
2670 posts
324 upvotes
Nonsense.

If the house went down in value, do owners get a capita loss? Canadian tax system does not currently allow for a capital loss on personal use properties (which include principal residence), and taxing PR is contrary to this symmetrical treatment.

The overriding principle is that people need a place to live, and currently any owner can designate only one property for a taxation year as his/her PR. Over time, real estate appreciates at the rate of inflation and taxing PR is taxing inflation which is ridiculous.
Jr. Member
Dec 1, 2007
107 posts
44 upvotes
Market values aren't been driven up by families moving their principal residence. It's almost entirely foreign investors buying property and riding the appreciation + rental income. This proposal actually penalizes Canadian residents and makes it even more beneficial for foreign investors.
Deal Fanatic
Mar 15, 2005
5481 posts
1029 upvotes
So basically anyone who already owns a nice detached home is set, but people who are on the outside looking in will be forever stuck there because nobody will sell their homes in the city anymore lol.

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