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Tax Planning in a Questionable Future Tax Environment
December 13, 2020
3:18 pm
Loonie
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Putting capital gains on principal residence will never fly. It would affect every home owner in the country, including relatively inexpensive condos and multi-million dollar homes. Even people who barely plan anything assume they are not paying capital gains on selling their house. Most consider that as their nest egg to pay for expenses near the end of life such as retirement homes and extra help etc. Depressing the housing market could even lead to a rush to sell, lack of buyers, foreigners buying up our housing stock cheap, lack of housing starts, and capital losses on homes, which would be even worse for government coffers. Not gonna happen. Inheritance tax, wealth tax, or consumption taxes have a much greater chance of happening - and I am not speaking in favour of any of them particularly in saying that.

As for "investors", well, many of them aren't really investors anyway, just there to scoop up dividends and they don't believe they are really taking a risk anyway. That aside, people who are into the stock market don't really have any need for further encouragement. They believe they will win eventually regardless or else they wouldn't be doing it, and they enjoy the game. Not to mention that it favours the rich who don't need any favours but who have the cash or access to margin accounts.

December 13, 2020
3:58 pm
dougjp
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And, as its now mentioned here, the principal residence capital gain being made taxable was the second rumor I heard. But with a typical Liberal twist, a cap in value below which the residence is not taxable. Or perhaps another way, tax the upper amount over some figure.

This is thought to be less possible to get implemented than the % increase in capital gains tax. Only because it will definitely get calls of "discrimination against families" by the Liberals into the press big time...... As in, how dare you attack my house where I live, if you want to do that and make us like Americans, then you have to make mortgage interest deductible like they have.... etc. This is not good political press.

Capital gains tax on the other hand? The Liberal press will applaud that, and people's opinions will be formed when before there were none. sf-cry

December 13, 2020
4:24 pm
Bill
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Regarding charitable giving, when I used to donate I would give 10 - 15 charities about $30 each in December. Not very generous, given household income at the time. The number of charities one donates to is not an indicator of generosity, the relevant number to disclose would be the % of yearly household income donated to a charity or various charities.

December 13, 2020
4:26 pm
Loonie
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There wouldn't be much point in capping a capital gain on a principal residence, I don't think. The wealthy would just buy a small cheap pied-a-terre, and use that as their principal residence for tax purposes, just as they now buy and use expensive properties for the exemption.

I did read that there is research going on as to the size of houses and the number of people living in them, to determine if they are too big and should somehow be taxed that way. I believe this was intended as an incentive to get people to buy, and builders to build, smaller and more efficient houses to help with the climate crisis.

This is not about the Liberals. The Conservatives will hit you up in other ways by austerity measures and privatization so that you will end up paying out of pocket for more things, especially including health care. As I said above, we are all going to lose, no matter who is in power. It's just a question of who loses how much and by what means and whether we want to live with the overall impact on society of whatever they do.

What burns me up the most is that this whole escapade could have been largely avoided, but a combination of incompetencies and lack of foresight at all levels of government, certainly including Ontario, destined us for the current disaster.

I heard that New Zealand recently declared itself basically covid-free and everything is back to normal there although I imagine they are still vigorously defending their borders. We could have done the same, but it required recognizing that the virus was more powerful than the economy and has no concept of "balance", which ahas been the overning principle.

December 13, 2020
9:31 pm
RetirEd
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I quite agree that the capital-gains exemption on principal residence is an insane measure in the modern housing market. Intended to make home ownership easier for low-income taxpayers and shield them from huge tax bills when selling property, it has created a housing casino and driven housing costs up. Since everyone needs somewhere to live, the housing/rental market simply absorbs all the cash out there competing for it - and the competition is now for financial gain, not housing. It's a major influence on the increase in income and wealth inequality. And compounded by racist, regional or age-related loan granting.

As with the introduction of the capital-gains tax, an initial valuation day would protect those with long-owned properties, and it would be the responsibility of home owners to put aside tax for gains, or pay yearly valuations assessments perhaps.

The result would be much slower property-value inflation, which is unpopular because windfall profits are so popular.

Though I use TFSAs, I think they are only justified as a balance to the unfairly favoured status of principal-residence property. Income should be taxed, though not necessarily at a flat rate. (I strongly support progressive taxation.)
RetirEd

December 14, 2020
3:40 am
Loonie
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Bill said
Regarding charitable giving, when I used to donate I would give 10 - 15 charities about $30 each in December. Not very generous, given household income at the time. The number of charities one donates to is not an indicator of generosity, the relevant number to disclose would be the % of yearly household income donated to a charity or various charities.  

Right. That can be a better measure, but, then again, there are lots of people who figure out ways of adjusting their income to suit their purposes.
Percentage of income doesn't deal with capacity due to other budgetary factors such as child-raising which affects some more than others, doesn't deal with disparities in cost of living across the country, and it doesn't consider accumulated wealth either. Percentage calculations can also obscure financial donations if they include in-kind donations of property of various kinds. I donated some rare journals to the University of Toronto Rare Books Library this year and received a tax receipt for their assessed value, over $1,000, and will be donating more next year to another university.
Each way of measuring or comparing donations has pluses and minuses.

However, if it's percentage of income that you're after, there are statistics available on how much Canadians give as a percentage of income. We are near the top of that chart, in the high 90s as a percentile among Canadians. I believe those figures come from StatsCan based on tax records and are reported annually..

Having given a fair amount of money over the years, I have come to the conclusion that amounts under about $400-$500 minimum are not worth bothering with, for me. Spouse still gives a few under that amount, being a kinder soul than I! I dislike having to deal with a lot of receipts and requests. We try to address our major concerns and passions by donating most of our funds to 4 charities.

We are also looking into possibly establishing a fund through one of the Community Foundations. For me, this can absorb a lot of RSP/RIF money, with a tax credit. (As many of you know, I regret ever having bought into RSPs and am eager to deplete them as efficiently as possible, which I can now do within five years or less.) The Foundation looks after the investments and administration and we can evaluate the requests and control the disbursements as long as we are able. Then we can just make one donation annually to the fund and eliminate all the extra receipts and so on. I think it will be fun to do!

We have also set up a scholarship in honour of a relative which we continue to fund on an annual basis but have not endowed.

There are many ways to give, and many ways to measure these gifts. There is also a lot to learn about what various organizations are doing. It can be fun. The main thing is to get started - and involve your children.

December 14, 2020
5:44 am
savemoresaveoften
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Capital gain on principal residence can be setup so the more time you own the property, the lower is the tax rate. For example,

For Canadians:
less than 10years, 50% taxable
10-20years, 25% taxable
More than 20years, tax free

Non-Canadians:
100% taxable no exemption

This type of scale makes it inline with the 50% capital gain inclusion on equities, and help to deter people just flipping principal residences for tax free gain.

Right now the incentive to people bidding up houses are not because they need a place to live, but because they are thinking why rent when they can pay mortgage and have a "guaranteed" sizeable tax free gain down the road. That to me is a way worse and wrong incentive than the 50% capital gain inclusion rate on equities.

Most see buying equities has some kind of risk, ask that same person and they will say rather buy a house cuz it is a guarantee win....

December 14, 2020
6:46 am
Loonie
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I think I see your point, but I still can't buy the idea. I think it's just too disruptive to people's expectations and plans. Telling someone they are going to now experience a tax on fifty per cent of their gain because they've only owned it for seven years is as crazy as telling you you have to pay more on your stock gain because of holding it only seven years. Reminds me of those market-linked funds where your gain is arbitrary as it is related to a particular end point.

People who buy houses don't all think there is no risk. I never thought that. In fact, I thought it was a big risk in the first five years or so when we were paying a mortgage at over 12 per cent. A mortgage is an enormous liability, not like buying stocks as you go along and can afford them. The fundamental difference between investing in a house and investing in the stock market, since both are deemed likely to go up over the long term, is that in the end you can live in a house or rent it out, it costs money to maintain it, and the debt load is very high. It is "real" property, which is I guess why they call it real estate. A stock certificate is of no use in and of itself. A house is.

And while I appreciate the effort involved in your formula, I don't think it's workable. For example, I have been in my house for over 30 years, same house, so no capital gains by your formula. I may sell, let's say next year, and buy a condo instead as I am at that age. But perhaps I can only manage in the condo for another five to eight years or so as I am getting old, so I sell and move to a retirement home. Your formula will penalize me just because I'm old and have trouble managing alone, whereas my neighbour who is the same age but has a disabling stroke one day while still in his house will not pay any capital gains because he moves directly to a nursing home. Also, so many people have no choice about moving as they must move because of jobs. Why should they get a worse shake than the guy who is able to stay put?
It also favours the wealthier folks and the ones whose mommies and daddies give them houses or substantial down payments as wedding presents so they can buy their dream home at the beginning and do not have to build equity in order to move up to a better house , paying capital gains every time.

I'd like to know though where these ideas are coming from. It doesn't sound like you thought them up yourself. In whose interests are they being put forward? Did this formula appear elsewhere? Coming from the US?

There are so many ifs, ands and buts that would have to be built into such a formula that is is simply not workable. And there would be a huge justified outcry against it.

And if you want to keep out wealthy foreign buyers, just don't let them buy houses here in the first place. They are certainly driving up prices and have wreaked havoc in cities like London, England where local people with decent jobs can't afford to buy anything anywhere.

December 14, 2020
7:16 am
savemoresaveoften
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Loonie said
I think I see your point, but I still can't buy the idea. I think it's just too disruptive to people's expectations and plans. Telling someone they are going to now experience a tax on fifty per cent of their gain because they've only owned it for seven years is as crazy as telling you you have to pay more on your stock gain because of holding it only seven years. Reminds me of those market-linked funds where your gain is arbitrary as it is related to a particular end point.

People who buy houses don't all think there is no risk. I never thought that. In fact, I thought it was a big risk in the first five years or so when we were paying a mortgage at over 12 per cent. A mortgage is an enormous liability, not like buying stocks as you go along and can afford them. The fundamental difference between investing in a house and investing in the stock market, since both are deemed likely to go up over the long term, is that in the end you can live in a house or rent it out, it costs money to maintain it, and the debt load is very high. It is "real" property, which is I guess why they call it real estate. A stock certificate is of no use in and of itself. A house is.

And while I appreciate the effort involved in your formula, I don't think it's workable. For example, I have been in my house for over 30 years, same house, so no capital gains by your formula. I may sell, let's say next year, and buy a condo instead as I am at that age. But perhaps I can only manage in the condo for another five to eight years or so as I am getting old, so I sell and move to a retirement home. Your formula will penalize me just because I'm old and have trouble managing alone, whereas my neighbour who is the same age but has a disabling stroke one day while still in his house will not pay any capital gains because he moves directly to a nursing home. Also, so many people have no choice about moving as they must move because of jobs. Why should they get a worse shake than the guy who is able to stay put?
It also favours the wealthier folks and the ones whose mommies and daddies give them houses or substantial down payments as wedding presents so they can buy their dream home at the beginning and do not have to build equity in order to move up to a better house , paying capital gains every time.

I'd like to know though where these ideas are coming from. It doesn't sound like you thought them up yourself. In whose interests are they being put forward? Did this formula appear elsewhere? Coming from the US?

There are so many ifs, ands and buts that would have to be built into such a formula that is is simply not workable. And there would be a huge justified outcry against it.

And if you want to keep out wealthy foreign buyers, just don't let them buy houses here in the first place. They are certainly driving up prices and have wreaked havoc in cities like London, England where local people with decent jobs can't afford to buy anything anywhere.  

To answer some of your questions:
Your condo/retirement scenario already has the embedded "it will go up in value" in your mindset since you worry about paying capital gain tax. See thats the mindset of most in general, and thats what I dont like to see.

Well that proposal is simply my own little 2 mins thinking after reading some of the arguments against it here this morning. To be honest, I am trying to come up with scenarios to counter all the for/against re taxing principal residences. The real problem is which political party / leader is brave enough to implement it, cuz it will cost their next election / job for sure. Are you saying I am the first to come up with such idea ? I am flattered 🙂

Re wealthy kids benefiting, they are born with a silver spoon in their mouth to begin with anyway, so if their parents own a house for 20 years and thus sell it capital gain free, its no different than having a wealthy parent just hand them handsome amount of pocket money each month. Its just the luck of born at the right home at the right time. I envy that too but that is life.

December 14, 2020
12:49 pm
Bill
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A myriad of ways to "donate". I suggest be a parent, have a few kids and raise them to be useful contributors to our world, plus you'll be spending hundreds of thousands on them (no tax deduction or credit), and mainly supporting the local economy, by the time they are financially independent. Another idea I like is buy as much stuff as you can at Costco, Walmart, etc that's from poor countries to support hardworking 3rd-worlders and their families as they try to climb up out of desperate circumstances. Or vacation in poor countries, throw some money around, lots of 3rd world in very dire straits now thanks to western world 2020 lockdown. Think outside the box, there are lots of ways to use your excess wealth in ways that directly benefit others.

December 14, 2020
1:00 pm
topgun
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Loonie said
I think I see your point, but I still can't buy the idea. I think it's just too disruptive to people's expectations and plans. Telling someone they are going to now experience a tax on fifty per cent of their gain because they've only owned it for seven years is as crazy as telling you you have to pay more on your stock gain because of holding it only seven years. Reminds me of those market-linked funds where your gain is arbitrary as it is related to a particular end point.

People who buy houses don't all think there is no risk. I never thought that. In fact, I thought it was a big risk in the first five years or so when we were paying a mortgage at over 12 per cent. A mortgage is an enormous liability, not like buying stocks as you go along and can afford them. The fundamental difference between investing in a house and investing in the stock market, since both are deemed likely to go up over the long term, is that in the end you can live in a house or rent it out, it costs money to maintain it, and the debt load is very high. It is "real" property, which is I guess why they call it real estate. A stock certificate is of no use in and of itself. A house is.

And while I appreciate the effort involved in your formula, I don't think it's workable. For example, I have been in my house for over 30 years, same house, so no capital gains by your formula. I may sell, let's say next year, and buy a condo instead as I am at that age. But perhaps I can only manage in the condo for another five to eight years or so as I am getting old, so I sell and move to a retirement home. Your formula will penalize me just because I'm old and have trouble managing alone, whereas my neighbour who is the same age but has a disabling stroke one day while still in his house will not pay any capital gains because he moves directly to a nursing home. Also, so many people have no choice about moving as they must move because of jobs. Why should they get a worse shake than the guy who is able to stay put?
It also favours the wealthier folks and the ones whose mommies and daddies give them houses or substantial down payments as wedding presents so they can buy their dream home at the beginning and do not have to build equity in order to move up to a better house , paying capital gains every time.

I'd like to know though where these ideas are coming from. It doesn't sound like you thought them up yourself. In whose interests are they being put forward? Did this formula appear elsewhere? Coming from the US?

There are so many ifs, ands and buts that would have to be built into such a formula that is is simply not workable. And there would be a huge justified outcry against it.

And if you want to keep out wealthy foreign buyers, just don't let them buy houses here in the first place. They are certainly driving up prices and have wreaked havoc in cities like London, England where local people with decent jobs can't afford to buy anything anywhere.  

If you are fortunate you may never need to sell your house.

Have a Great Day

December 14, 2020
1:32 pm
Norman1
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To never need to sell one's house. That's not realistic.

I agree with, Loonie. It is a bad idea to start taxing someone's gain on their principal residence. The next home is not necessarily cheaper, especially if they are not moving that far away.

People buy houses because they want to own. That malarkey about it being an investment is just something they feed themselves to justify overpaying for one or spending hefty sums on the renovations to one.

When people are ga-ga over a house, are they thinking "Wow, this place looks like it will have an IRR of 8% per annum in contrast to 2.5% of the last place" or "That dining room and kitchen would be great for the family get togethers!"?

December 14, 2020
2:16 pm
savemoresaveoften
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Norman1 said
To never need to sell one's house. That's not realistic.

I agree with, Loonie. It is a bad idea to start taxing someone's gain on their principal residence. The next home is not necessarily cheaper, especially if they are not moving that far away.

People buy houses because they want to own. That malarkey about it being an investment is just something they feed themselves to justify overpaying for one or spending hefty sums on the renovations to one.

When people are ga-ga over a house, are they thinking "Wow, this place looks like it will have an IRR of 8% per annum in contrast to 2.5% of the last place" or "That dining room and kitchen would be great for the family get togethers!"?  

If the next home is not necessarily cheaper, then dont buy unless one can afford it after the capital gain tax on the first one. The tax is actually working as it forces someone to think twice before buying, as oppose to leverage off a "tax free capital gain" to snap on a bigger house. The progressively lower tax based on years of ownership also cushion the blow. Also the formula can be adjusted so the first X amount of gain is tax free for first time home buyers.

When some buys a house, they are thinking vow its a nice place and since any capital gain will be tax free and I get to keep 100% of it, a 10% return on a $2MM house is twice the money of a 10% return on a $1MM house. Lets get the $2MM, live in a big house and sit on a bigger gain down the road, all tax free !

December 14, 2020
3:10 pm
Norman1
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savemoresaveoften said

If the next home is not necessarily cheaper, then dont buy unless one can afford it after the capital gain tax on the first one. The tax is actually working as it forces someone to think twice before buying, as oppose to leverage off a "tax free capital gain" to snap on a bigger house. …

When some buys a house, they are thinking vow its a nice place and since any capital gain will be tax free and I get to keep 100% of it, a 10% return on a $2MM house is twice the money of a 10% return on a $1MM house. Lets get the $2MM, live in a big house and sit on a bigger gain down the road, all tax free !  

No-one decides that way.

Anyone who actually understands what those leveraged return numbers mean will know that a $2 million home will have at least 2X the property tax each year as a $1 million home.

As well, such numerically-literate buyers would know that their 25% down for the $1 million house is only 12.5% down for the $2 million one. The resulting mortgage payments would be about 2.3X each and every month.

People buy the $2 million home, that will cost at least 2X each month, because they want the $2 million home. Period.

What the proposal does is unnecessarily penalizes those who move to a comparable place across town, that is closer to work or to daycare, or to a more expensive area for a better job or to replace their lost job.

December 14, 2020
6:26 pm
christinad
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I think most people buy hoping their property will go up in value. Maybe they don't buy for that reason but that is the side benefit. Would i like to sell a 1.5 million home like my parents? Yes i would.

I have mixed feelings about the issue. I have considered renting because i am affected by the huge insurance increase on old condos. But guess who will be affected by any capital gain changes - the renters. The whole thing isn't equitable. I'm not sure it's fair renters are affected more by the proposed tax increase. They won't change the home buying exemption though.

December 14, 2020
9:46 pm
topgun
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christinad said
I think most people buy hoping their property will go up in value. Maybe they don't buy for that reason but that is the side benefit. Would i like to sell a 1.5 million home like my parents? Yes i would.

I have mixed feelings about the issue. I have considered renting because i am affected by the huge insurance increase on old condos. But guess who will be affected by any capital gain changes - the renters. The whole thing isn't equitable. I'm not sure it's fair renters are affected more by the proposed tax increase. They won't change the home buying exemption though.  

Each is UNIQUE. I believed renting was better until I could afford a house. I have one friend that saved a long time and paid cash.

Have a Great Day

December 14, 2020
11:28 pm
Loonie
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If I try to stand back and look at this issue and why it is so controversial, it seems that some people are very upset that the price of houses in some areas has skyrocketed. They don't like the fact that some home owners got lucky and are doing very well when they sell, much better than they could have ever foreseen when they bought (thus ditching the theory of stars in the buyer's eyes about future gains), and they don't like some of the consequences.
Possibly the consequence is that their children are having trouble getting into the housing market. It isn't that the shine has gone off home ownership or even that they want it to. For reasons I don't understand, they are especially bothered by people who sell in less than 20 years or 10 years or some other arbitrary number of years TBA and who still get lucky with their selling price. Some of this is anger at speculators but that can't possibly cover everyone in the penalized category, especially as there is already legislation that inhibits flipping. (If necessary, I would advocate strengthening that legislation rather than putting capital gains on houses.)

Investing in a house is being portrayed as a sure thing. But it is not a sure thing. Some historical perspective is very important here. You may be annoyed that prices have recently spiked in some areas, but this was not always so. Sometimes, the price of houses has moved with inflation. Sometimes houses have depreciated - especially over the short term. When interest rates fall, the price of houses tends to go up as people can afford larger mortgages, but when those interest rates rise again, some of them will lose their houses. It was only about a decade ago when there were many many foreclosures in the US, for example, where they apparently have the capital gains tax on houses. (but also have mortgage interest deductibility.) There were also foreclosures around approx 1990 because of economic conditions when mortgages were higher than the value of houses in some cases in Toronto. And it was much worse again during the Great Depression. Don't assume we won't see another one of those. One thing that is needed to dispel this bad idea is better financial education.

Buying a house remains a leveraged and very expensive affair. When you leverage an investment, you stand to lose everything if you can't keep up the payments. This is not "safe"; it's a calculated risk based on the idea that if you can hold out long enough and keep up payments and maintenance, you will be ahead. It requires a lot more maintenance than your stock certificates. In some respects it's more risky than a non-leveraged stock market investment, the kind that most people buy. Norman is right; people buy houses because they want houses, they have a fantasy of what home ownership will add to their quality of life, they want to eliminate the landlord; and they tend to minimize the risks accordingly.
It is because of these very real risks and an uncertain economy that, if anyone asks me, I frame my advice in terms of how the prospective buyer can best insulate themselves against the possibility of losing their shirt (down payment).
Quite recently a newbie on this forum asked advice about his plans to buy a house. in a year or so. I advised him not to buy the most expensive house the bank said he could "afford", to just buy what he actually needs, to look for rental potential, and to keep a significant emergency nest egg in a safe place (not stock market). I said all these things precisely because buying a house is a risky undertaking. But if the capital gains plan were in place, I might have to advise him to buy the most desirable home he could "afford", to maximize his debt and his risk, which I would not want to have to do. Such considerations might even drive up the prices of houses at the higher end.

Approximately 10 years ago or a bit longer, there were several media articles extolling the virtue of renting, even for people who could afford to own. Various calculations were made about the cost of ownership over time and the likelihood of prices rising significantly from that point. The conclusion was that it was at best break-even and one should seriously consider renting. A relative who owned a nicely appointed home in a sought-after neighbourhood in Toronto, with recent renovations, took this seriously and pointed it out to us, suggesting we should consider selling. We didn't; he did. He and his wife moved to rental. A year or so later their house could have been worth about 200K more; and now it would probably be twice what they got for it. I tell this story not because we are more clever than our relative, but because it illustrates how unpredictable the market is. If you introduce a new tax based on current conditions of skyrocketing prices in some areas, you are going to be stuck with it indefinitely. It will always have a depressing effect on house values, whether it makes sense or not, except possibly at the upper end. And you are definitely going to regret it. And beware of any proposal that says it will just be a small amount o temporary. That is a Trojan horse.

It remains a bad idea.

If your real concern is speculators and foreign buyers, then address those problems specifically by talking to your elected representatives and getting legislation beefed up.
If your concern is that your kid can't afford a house, tell them to wait, or give them some money if you can afford it. Some of them have unrealistic expectations.
If you think the problem is that too many people are under the impression that their houses will appreciate enough to underwrite their retirement, then investigate what we can do to ensure that they have adequate incomes from other sources.
If the concern is that not enough people can afford a home, then creating a tax that makes home ownership less attractive (at least in theory
0 does not accomplish the goal.
If you are jealous that someone you know in another city has made a bigger profit than you, calm down and count your blessings - and your dividends - and donate some of it to a charity that supports those you are concerned about.

P.S.
I just did a little hunting around the internet to see where this idea was really coming from. I see now that it appears to be coming from the current federal government by roundabout means.
I think the reason they are floating it is because they are afraid of doing other things like increasing the general income tax rates. They also don't want to see the housing market cooled off by higher interest rates as that would cost them more in servicing the debt. They just want income.
They probably think they can appeal to younger people who are having trouble finding the money to buy houses in the big cities now. In Toronto at least, even a modest home requires help from mom and dad with the down payment, no outstanding student or personal debt, plus two good professional salaries (one should ideally be an accountant, lawyer or similar income level) - at least that's what I see happening.
But those young people need to be forewarned that this will not solve their problem. Mom and dad may not be able to help with the down payment if they have to worry about capital gains on their condo which they bought a couple of years ago since they may need the money to pay for retirement homes and health care which will be curtailed under other likely austerity measures. And in this new economy where jobs are not for life, they will not be able to sell their house if they need to move without incurring a tax that will impair their ability to buy another one. Every time they move, their net worth will decrease, so why buy a house at all?

Depressing the market will help nobody in the end. Even the bankers might object as there will be less money on loan to profit from. Rents will become even more unaffordable than what they are currently, and rental stock is not increasing very much. So it is not going to work for them and I hope they don't fall for it. I don't think they will either, as it just doesn't make sense.
But the fact that they are even thinking of such measures is an important barometer of what might be on the table.

December 15, 2020
5:16 am
savemoresaveoften
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its a one-solution-does-not-fit-all scenario, sometimes even the most sensible solution will get opposed by those that are negatively affected by it.

We know 3 things:
1) Rapidly rising housing prices are pricing most average income families out of the market
2) The deficit will need to be paid back by all, in one form of tax or another
3) Interest rate can not go up any time soon or in any meaningful, as it will cost a lot more for everyone to borrow (home buyers, govt, any one with a loan). This continues to fuel the housing price increase. Retirees who rely on some form of fixed income return are negatively impacted.

December 15, 2020
6:02 am
Bill
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House prices are not too high (or too low), they are what the willing buyers and sellers are freely agreeing on, every single day. They obviously are affordable, they're selling fairly quickly at the current prices, obviously lots of people are affording them. Too bad for those who can't, figure something else out.

Often the beneficiaries of free capital gains on principal residence are the next generation, the kids. Especially for the wealthy, can put a fair number of millions into a home. Might be an idea to try to tax some of that, somehow.

It's not the deficit but the debt that needs to be paid back. So say some. But it won't be, it'll just get bigger because voters today reject "austerity", we (i.e. the majority) will turf anyone for whoever will give us the most freebies. Anyway, the debt has been rising my whole lifetime and life is more lavish than ever before, not to worry. We're told today's young do things smarter than previous generations of humans, so I'm sure they'll figure it out.

December 15, 2020
11:02 am
Scruge
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I don't like the idea of capital gains tax on my principal residence because it negatively affects me. In the US they pay the tax on the gain but they can also deduct mortgage payments. Since my mortgage is paid off I would be taxed on the sale with no deductions on the payments.

In the UK, each real property sale is taxed, "Stamp Duty Land Tax". The tax is paid by the buyer so be careful what you wish for.

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