A petition in the House of Commons opposes the idea of taxing home equity.
It calls on Liberal Prime Minister Justin Trudeau to reject “any possibility of this tax being implemented in the future”.
“It is wrong to punish homeowners with added taxes when they sell their home after years of investment,” the petition states.
Home equity is the difference between the market value of a home and the unpaid mortgage.
To illustrate, if a home is worth $500,000, and the owner owes $400,000, the equity is $100,000.
Currently, Canadians do not pay tax on gains they make from the sale of their home.
That is, if the property served as their principal residence for every year they owned the house.
The petition also urges Trudeau to cancel a supposed agreement made by Canada Mortgage and Housing Corporation to fund a research on taxing home equity.
CMHC did not make a spokesperson available for an interview.
Instead, the agency offered a statement saying that it contributed $250,000 for a research project by Generation Squeeze.
The statement did not mention a prospective tax on home equity.
“The objective is to identify solutions that could improve the housing outcomes for renters and homeowners of all ages,” the statement reads.
UBC professor Paul Kershaw founded Generation Squeeze, a movement focused on young Canadians and housing.
In 2018, Kershaw authored a paper titled ‘A Tax Shift that Benefits the Vast Majority: the case for more annual (deferrable) taxation of housing wealth to rebalance the mix of revenue generation tools used by Canadian government’.
“Shifting taxes towards housing wealth will help reduce treatment of homes as commodities, cooling the market and reining in costs,” Kershaw wrote.
The UBC academic proposed a one percent surtax on home value above $1 million.
Kershaw called it as a “Million Dollar Homes Tax”.
As of August 2020, the price of a typical single detached home on the east side of Vancouver reached $1,487,300.
By way of exampe, if $1 million in mortage is owed on the same East Side home and the owner has to pay a one percent tax on home equity, that means an additional $4,873 in annual taxes.
On the west side of the city, a freestanding home was valued in August this year at $3,053,900.
On its website, Generation Squeeze states that it will convene stakeholders starting in September 2020.
The effort will “examine potential policy solutions that treat housing as a home, rather than an investment vehicle, and how these solutions could be used to improve housing affordability”.
The group states that a final report will be published at the end of the project in 2021.
In a May 22, 2019 post on its site, Generation Squeeze talks about the need for a “well-designed #TaxShift”.
This means “lowering income taxes and raising taxes of property wealth”.
“Another way to put it: rebalancing our tax system will help us dial down harmful demand and enable more affordable supply,” Generation Squeeze co-executive director Eric Swanson wrote.
Swanson noted that potential measures could include “broad or narrowly-targeted tax policy”.
Leanne Korczak of Cochrane, Alberta on August 28, 2020 started the House of Commons petition against a home equity tax.
The petition notes that UBC researchers in 2019 referred to homeowners as “lottery winners with an unfair tax advantage”.
“Millions of Canadians have purchased homes as not only a place to live, but an investment they hope to see grow in value over the years,” the petition states.
Blake Richards, who is the Conservative MP for Banff—Airdrie, is sponsoring the petition.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
