Check It Out: Our house: a home and an investment
By Joan Janzen
joanjanzen@yahoo.com
The joke goes like this ... “I was going to open a business renting out blow up bouncy castles, but I’ve heard that the federal government doesn’t like it when you inflate your assets.”
Whether you call it your castle, or your home, home owners in Canada are relieved they do not need to pay tax on the sale of their principal residence. Which is why the Canadian Taxpayers Federation (CTF) asked the Canada Mortgage and Housing Corporation (CMHC) about claims that they have invested $250,000 in federal home equity tax research. Although they denied such claims, CTF has documents that help further explain the research.
They clarified that “a home equity tax is not the focus of the housing research,” but also said, “The objective is to identify solutions that could level the playing field between renters and owners.”
Tim Hudak, of the Ontario Real Estate Association wrote an editorial last summer saying, “While the CMHC back pedalled from a home equity tax, they were clear that their goal is to make home ownership less attractive. Their research partner has been leading the charge for higher taxes on home ownership to make owning more equivalent to renting.”
There are reasons why Canadians choose to purchase a home rather than rent. According to CTF, a home equity tax would leave home owners with less funds to purchase another home and would be devastating for home owners who were planning to use money from the sale of their home to finance their retirement. A capital gain could also put home owners into a higher tax bracket. More recent and more indebted home buyers would be hit hard by a general drop in house prices. In fact anyone who hasn’t yet sold their home would receive a double hit in the form of a tax and the devaluation of their property.
The CMHC stated that the initiative hopes to address the question, “After COVID, how can we treat housing as a place to call home, rather than an investment vehicle?” But shouldn’t your personal property be your ‘home’ and an ‘investment’?
An article in the Financial Post made the observation that causing housing to be a less attractive investment is a strange way to make home ownership more accessible.
The final report by CMHC is due in June, at which time the federal government will decide what to do with it. At the end of the day, the equity tax may not be the main focus of the housing research, but the government’s $1 trillion debt provides substantial motivation to pursue it further.
In the mean time it certainly wouldn’t hurt to take a minute to look up and sign the Taxpayer’s Federation petition regarding the equity tax. Canadians need to push back on this so it doesn’t become the main focus.
You can contact me at joanjanzen@yahoo.com