Capital Gains Tax on Homes, a Step too Far

In February, the red-hot housing market warmed up Canada’s frigid temperatures. The immediate future might not be certain, but public policymakers are exploring a series of tools to cool off the real estate market that has been soaring since the early days of the coronavirus pandemic, and before that. One of these ideas is a capital gains tax on home sales.

The average Canadian house price climbed at an annualized rate of 20 per cent, hitting $816,720 in February, according to the Canadian Real Estate Association (CREA). Sales activity was sizzling, with more than 58,000 changing hands. The positive development was that new listings surged, and new housing construction activity remained decent in the first couple of months of 2022.

With the Bank of Canada (BoC) raising interest rates by 50 basis points at its April policy meeting, could the housing market start seeing signs of a slowdown in the coming months?

“As expected, after a bit of a lull in January, we saw the first batch of spring 2022 listings come to market in February, and they were quickly scooped up by buyers,” said Cliff Stevenson, Chair of CREA, in a news release. “It’s unclear if this is the beginning of a re-emergence of some of the many would-be sellers who have been dormant for the last two years, or if the supply will fade towards the summer like it did in 2021.”

Could a capital gains tax on primary residences be the solution to the country’s housing affordability crisis? Industry experts have weighed in on the proposal.

Complete Article: https://blog.remax.ca/capital-gains-tax-on-homes-a-step-too-far/

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