Real Estate

Trudeau planning to tax gains on personal residence?

  • Last Updated:
  • Dec 11th, 2022 2:14 pm
Deal Fanatic
Oct 7, 2007
9279 posts
5105 upvotes
Well a lot of that is baked in now with borrowing until the end of the year. We can always cut spending the question is where and by how much. We spend somewhere around a quarter of our federal budget on individual transfers. Sure we can cut but you are basically taking from the poor some of whom will vote against it. Transfers to other governments mostly for healthcare is another quarter. Same story. A quarter is basically everything else the federal government does about a third of which is defence. We have promised to nearly double defence spending in the medium term and conservatives have said they will accelerate this. Just holding this steady looks difficult. Interest and other transfers makes up the rest. So of course there is lots of waste but where do we make real cuts that brings us to balance?
How much spending is not for the direct benefit of Canadians and/or leaves the country? While it is nice to be charitable, is it time to maybe take a break from sending enormous sums of taxpayers' money overseas until we get our house in order?
Last edited by choclover on Jul 29th, 2020 1:56 pm, edited 3 times in total.
Deal Fanatic
Oct 7, 2007
9279 posts
5105 upvotes
taxrage wrote: it's not ridiculous. It's all about fairness. I don't like paying taxes, but the Bon Jovi example illustrates my point exactly. Very wealthy people can use an expensive PR as a convenient way to park large amounts of capital and turn it into a tax-free capital gain over time. Oprah Winfrey has a house worth $100M+. Should she be able to pocket a $50M capital gain tax-free when she sells it in 10-20 years?
Are you talking about Oprah's property in Canada or the U.S.? The taxation rules are significantly different in the countries so where her property can have a big impact on the outcome of a sale. Also, who knows what anyone's property will be worth in 10-20 years. It seems that there are all kinds of forces at work right now that may cause property valuations to drastically change in the future. For example, in some urban areas in the U.S., property taxes have risen to staggering levels and, at the same time, house prices have dropped tremendously in value. Not sure if this is cause and effect but it seems that the two could be tightly correlated. If demand for property shifts to other areas, those areas may correspondingly increase in property value.
Member
Jul 23, 2020
287 posts
238 upvotes
Most people already treat their principal residence as an investment, stop pretending that it is not and start taxing it. Just like when they removed multiple principal residence for spouses in 1982.
[OP]
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Jan 15, 2017
1983 posts
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choclover wrote: Are you talking about Oprah's property in Canada or the U.S.? The taxation rules are significantly different in the countries so where her property can have a big impact on the outcome of a sale. Also, who knows what anyone's property will be worth in 10-20 years. It seems that there are all kinds of forces at work right now that may cause property valuations to drastically change in the future. For example, in some urban areas in the U.S., property taxes have risen to staggering levels and, at the same time, house prices have dropped tremendously in value. Not sure if this is cause and effect but it seems that the two could be tightly correlated. If demand for property shifts to other areas, those areas may correspondingly increase in property value.
I'm talking about the principle of not viewing unlimited tax-free capital gains on the sale of a PR as sacrosanct. We limit tax-free gains on farms and small businesses to under-$1M to encourage those economic activities. I see little/no value in allowing unlimited capital gains on a PR. Who does that benefit?
Sr. Member
Jul 18, 2020
753 posts
1217 upvotes
ricodeals wrote: Most people already treat their principal residence as an investment, stop pretending that it is not and start taxing it. Just like when they removed multiple principal residence for spouses in 1982.
That might be true, but even if such a principle tax is implemented you will still have a hard time catching up the wealth gap consider a modest home in the GTA/GVA these days will cost around 1M, let's say I sell it when it hit 2M only 250K will go into tax. And then compounded many boomers parents will not sell and their homes will get pass on to their kids as inheritance, it will still be a blessing to inherit such wealth after capital gain tax is paid and on top of that they still have equity build up if they had already owned a house.
Deal Addict
May 9, 2017
1230 posts
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taxrage wrote: Exactly what rich person would structure their income as salary and be subject to a 53% marginal rate? Outside of his PM salary, do you think Trudeau pays 53%? Do you think Morneau pays 53%?

When John Roth cashed out $100M in NT stock options did he pay 53%? Well, at least he paid 25%. He has a multi-million dollar estate now and will make millions when he sells. THAT will be tax-free. Should it be? I don't think so.
There are lots of salaried employees that make way more than 220k (top marginal tax rate in Ontario) and have no way to lower the tax rate on the income below the outrageous tax rates we already pay.
Member
Jul 23, 2020
287 posts
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NotRobot wrote: There are lots of salaried employees that make way more than 220k (top marginal tax rate in Ontario) and have no way to lower the tax rate on the income below the outrageous tax rates we already pay.
Just look at the sunshine list in ontario, that is all t4 income. Those are still rich people.
Sr. Member
Aug 17, 2018
628 posts
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ricodeals wrote: Just look at the sunshine list in ontario, that is all t4 income. Those are still rich people.
Income and wealth are two different things.
Sr. Member
Jul 18, 2020
753 posts
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ssj4_ootaku1 wrote: lol 4 page discussion on some person's OPINION
Well, there are a lot of opinions when some people think that life is not fair. And when the government do something about it, it will even make life worse for those who think it is not fair.
Deal Addict
May 12, 2014
3402 posts
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Montreal
taxrage wrote: Exactly what rich person would structure their income as salary and be subject to a 53% marginal rate?
Very very many. Certainly many many I know.

Here's a thought experiment: if they weren't paying 53%+, then why would they care about the marginal tax rate being so high?

As for stock option taxation, I'm not an expert, but I'll certainly agree with you that stock options as a salary could be taxed differently (although I am aware of the counter arguments).

Either way, it hasn't really addressed my points...
[OP]
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Jan 15, 2017
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NotRobot wrote: There are lots of salaried employees that make way more than 220k (top marginal tax rate in Ontario) and have no way to lower the tax rate on the income below the outrageous tax rates we already pay.
That's certainly high income, but I would stop short of calling them rich. What's your point here, that the $250K income earner should be able to earn $1M+ in tax-free capital gains on the sale of his/her PR because they're otherwise in the top tax bracket?
[OP]
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Jan 15, 2017
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FrancisBacon wrote: Very very many. Certainly many many I know.

Here's a thought experiment: if they weren't paying 53%+, then why would they care about the marginal tax rate being so high?
You mean like incorporated professionals such as doctors, dentists, CAs etc? It seems they were very quiet...until Morneau clamped down on the practice of income sprinkling. Now there's a huge outcry.
Deal Addict
May 12, 2014
3402 posts
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Montreal
taxrage wrote: You mean like incorporated professionals such as doctors, dentists, CAs etc? It seems they were very quiet...until Morneau clamped down on the practice of income sprinkling. Now there's a huge outcry.
Income sprinkling is a totally different issue. You do realize that if they were resorting to income sprinkling, it's because they were otherwise paying the top marginal tax rate, right?


And yes, to answer your question to the poster above: once someone has paid their taxes, they should equally benefit from any tax policy.

If food is untaxed, they shouldn't pay a special tax just because they eat steak more than Spam. If airfare is taxed at x% they shouldn't pay y% just because they fly to Maui vs Ogunquit.
Deal Addict
Dec 24, 2009
1162 posts
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On what ground is your PRIVATE property, bought with AFTER TAX dollars is going to be further taxed? Madness
Deal Expert
Feb 29, 2008
19416 posts
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Tarrana & The Ri…
Ken_vs_Ryu wrote: On what ground is your PRIVATE property, bought with AFTER TAX dollars is going to be further taxed? Madness
Get this... people are OK with it. I've always said, our country solves problems with taxation, they don't do anything else and why would they? Canadians are so used to getting taxed up the ass, they are willing to fall for this.

You're taxed when you buy and sell? Complete nonsense.
Deal Addict
Jun 13, 2009
1092 posts
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Toronto
Ken_vs_Ryu wrote: On what ground is your PRIVATE property, bought with AFTER TAX dollars is going to be further taxed? Madness
Let me play devil's advocate:

We all have to pay capital gains tax after selling shares, which are also purchased with after tax dollars. And cars. And lots of other things. Why should homes be treated any differently? Because we got used to paying no tax? Things change.

Me:
The price of homes has doubled and tripled in many of the major housing markets across Canada. So there is money to be made from a tax perspective. We now have to pay for CERB and all of the other benefits the federal gov. has implemented due to covid. Exceptional times may lead to exceptional measures at the federal level.

Federal leaders are likely asking all of their departments for ideas. This is probably one among thousands that they will be assessing.
Member
Jul 23, 2020
287 posts
238 upvotes
Jruuu wrote: Let me play devil's advocate:

We all have to pay capital gains tax after selling shares, which are also purchased with after tax dollars. And cars. And lots of other things. Why should homes be treated any differently? Because we got used to paying no tax? Things change.

Me:
The price of homes has doubled and tripled in many of the major housing markets across Canada. So there is money to be made from a tax perspective. We now have to pay for CERB and all of the other benefits the federal gov. has implemented due to covid. Exceptional times may lead to exceptional measures at the federal level.

Federal leaders are likely asking all of their departments for ideas. This is probably one among thousands that they will be assessing.
Not only that, property ownership has become more than a roof over your head. You wont be taxed for selling it for what you bought it for, only the difference between selling and buying price.
Jr. Member
Nov 23, 2014
197 posts
75 upvotes
East York, ON
It's probably easier to increase a land transfer tax or another tax on selling the house, than tweaking capital gains, this is based on optics, but netting the same result.

However, if they did start with a capital gains tax on homes, they may start at a small "acceptable" level, and then gradually increasing over time, so that each incremental increase brings less outrage.

The current top marginal tax rate is over 50%, but we didn't get there in one shot, it was a slow and steady increase, so outrage is limited.

With the huge deficit we have after this year and next, you have to think the options of exploring additional revenue is going to expand.
Sr. Member
Oct 21, 2016
946 posts
718 upvotes
Where in the article does it say Trudeau and the Liberal government want to implement such a tax ? It's an opinion piece .

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