Ontario urging Ottawa to change tax rules in bid to curb real estate speculation

Ontario urging Ottawa to change tax rules in bid to curb real estate speculation

Ontario urging Ottawa to change tax rules in bid to curb real estate speculation Ontario Finance Minister Charles Sousa is urging Ottawa to address speculative investing in the country's housing markets by changing how such profits are taxed.

Currently, capital gains tax is charged on 50 per cent of the profits on the sale of a home, unless the property qualifies for the principle residence exemption.

In a letter to federal Finance Minister Bill Morneau on Friday, Sousa says that boosting the taxable amount above 50 per cent could reduce the incentive for people to purchase homes on speculation. Morneau is set to release his latest budget on Wednesday.

Speculative investing in the real estate market _ buying a home in the hope of turning a profit rather than to live in _ is believed to be one of the culprits behind soaring house prices in certain markets including Toronto and Vancouver and their surrounding areas.

Sousa says curbing speculative real estate purchases could help address dwindling housing affordability so that first-time buyers are able to get into the market.
Such a measure could also generate tax revenue to put towards other housing affordability initiatives, he adds.

``My primary focus is to address the concerns of middle class Canadians who are worried about buying their first home,'' the letter reads.

``Additionally, it is important that the housing market remains stable, meaning that borrowers and lenders are resilient and able to withstand economic shocks.''


The Canadian Press
2 Comments
  • Ron in Victoria 2017-03-20 4:45:51 PM
    Typical Liberal solution to any problem - TAX IT!
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  • Julie Stamp 2017-03-27 2:41:24 PM
    I believe that facts and figures should be reviewed for information and then a solution presented and discussed with integral fractions within the industry. The issue seems to be that there is a concern about a potential housing bubble and affordability. I have read numerous articles stating that it's about to fall off a cliff, that Equifax says everyone is making up their incomes to qualify for mortgages, that speculative buyers are causing the increases and recently that Alternative lenders are the issue, also that flippers are causing it. This seems a lot like shaking a magic 8 ball and getting the reply "unknown" Really only strict facts should be used when making solutions to potential problems. It should not be difficult to obtain reports from lenders on whether the house was purchased as an owner occupied home or an investment property, once known to be an investment purchase it is not that much more difficult to determine if it is a Canadian resident or a foreign buyers, all of these details are submitted both with the Lender on the property and with RECO, there are your obtainable facts. My guess is that right now with current interest rates it is more affordable for a family to purchase a home than to rent one, renting can cost more now that a monthly mortgage payment, there is a lack of supply both in the GTA and Durham Region, since interest rates cannot just be raised as this would cause it's own issues, supply needs to increase both for purchased homes and affordable renting options. If the facts show that foreign speculation is a genuine concern then implement the foreign tax the same as B.C. did. We are already running a prudent qualifying ship in Canada with many restrictions and double checks in place to ensure that deals are not being and cannot be done how they were in the USA. That system was completely corrupt from the top down. Canada's lending system does not work that way, the recent changes made last year were unjustified, there are no default increases with CMHC, taking away bulk insurance on refinances and requiring lenders to have more capital if done should have been slowly phased in with non bank lenders given the opportunity to adjust to meet the new standards, all it has done so far is limited clients choices, penalized those Canadians that do have large amounts of equity in their homes, which you say you want on one hand yet they now have to pay higher rates due to their fiscal responsibility. It now requires a PHD to determine what rate can be offered to a client and a host of questions, forcing more clients to go to the big banks and removing competitive pricing and options from the market. To be fair in the marketplace, competition must be allowed this is the check and balance against a monopoly on a market, and as Mortgage Brokerage do a large share of transactions in Ontario and Canada listening to their opinion as well when making sweeping changes would be beneficial to obtaining a more thorough picture and perhaps understanding of the market.
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