New Canadian Home Tax
It’s no secret that the price of houses have been skyrocketing, not just across Canada but throughout many global markets as well. Many recommendations paired with opinions have come forward on what can be done to solve this “housing market crisis”. Advocacy group Generation Squeeze released a report entitled Housing Wealth and Generational Inequity, which was funded in part by Canadian Mortgage Housing Corporation and National Housing Strategy.The report included many thoughts and options, but one stood out more than the rest.
Among the recommendations was the call for a tax that would range from 0.2% for homes valued between $1 million to $1.5 million, and up to 1% on homes valued over $2 million. With detached homes in the KW area hitting an average price of 1.1M in January, this will be a tax on the majority of homeowners. This tax would be paid on an annual basis or have the option to defer until the home is sold and pay it all out on closing.
The report states - A home valued at between $1-1.5 million would incur an average annual surtax of $408, while a home valued at over $2 million would average an annual tax payment of $14,710.
The idea behind this is to make real estate less of a tax haven for homeowners. In my opinion, this will have no impact on the housing market affordability. The issue is a supply issue - which is why there are sometimes 30+ offers on a house. More Buyers and not enough supply.
Home ownership is expensive, on the rise and is slipping further out of reach for many Canadians. Currently, Canadian homeowners already pay a punishing land transfer tax when they get the keys to their home, as well as increasing property taxes every year. And now, they want you to pay even more. Making homeownership more expensive isn’t the answer.
CMHC and the anti-homeownership interest groups supported by CMHC funds should focus on increasing housing supply and choice, especially for first-time home buyers, instead of trying to punish homeowners. It's easy to see the true motivation when they share something like this: Such a tax would impact about 9% of Canadian homes and raise between $4.54 and $5.83 billion for the government. Cha-Ching.
Some of the other recommendations were:
Task Statistics Canada reviews the “owned accommodation” component of its Consumer Price Index (CPI) calculation, and reports annually on the influence of monetary policy on the growing gap between home prices and earnings.
Align the mandates of the Canada Infrastructure Bank and the CMHC to incentivize lending to scale up green co-op and affordable purpose-built rental.
Create a Permanent Housing Affordability Off-Ramp Program and Savings Plan
Everyone has differing opinions on what to do about the housing crises in our area, and I’d absolutely love to hear your thoughts on what's happening and what you think could be done.
To read the full report: Click Here.
