Governments don’t tax capital gains on people’s homes, but they tax almost everything else about homes and are looking for more
By Lawrence Solomon
Canadian governments, which need ever more revenue to finance their spending, have been targeting what they traditionally viewed as Canadians’ most undertaxed assets: their homes. The upshot: Governments have been filling their coffers at the expense of homeowners, relieving them of their cash and sometimes their homes.
The federal government’s recent increase of the capital gains inclusion rate to 67 per cent of gains above $250,000 may be the best known, and most painful, of the new levies besieging homeowners. A modest family cottage that might have cost $20,000 when purchased in the 1960s might have a value today over $2 million, representing a capital gain of $2 million or more, with roughly $1.3 million of that now taxable. If the children who inherit it pay tax at the top marginal rate, they’ll owe roughly half that amount — almost $650,000. If they can’t come up with the money needed to satisfy the tax man, the family cottage will need to be sold, ending traditions and a bedrock of family cohesion that had spanned generations.
Governments’ extraction of value from our homes has accelerated in recent years as they have became more desperate, both to raise revenue and to find scapegoats to deflect blame for their own starring role Canada’s housing shortage. As the byzantine extractions multiplied, our homes, once considered our main assets, have morphed for many into our main liabilities. Once upon a time, “safe as houses” was a no-brainer investment strategy. Anyone who now sees a house as a safe investment needs his head examined.
Lawrence Solomon is a founding columnist of FP Comment. [email protected]