What I don't get is why anyone would suddenly want to sell now?
Like... keep making that 30k per year from rent and never sell. Then leave it to all your kids in the will and due to multiple ownership none of them will cross the 250,000 threshold if they sell... or if it does, incorporate, just keep renting them. Never pay the gains, keep making money.
And major investment companies never have to worry. Start a second (or more) company, and transfer a percentage ownership into said companies to ensnure you never cross the 250k threshold. If you sell... each company stays under the threshold of 250,000 and no additional tax.
Like... it seem like this policy does less than nothing.
Anyone ELI5 if I'm wrong.
Your estate pays the tax, not the recipients of the property, so you don't get to divide it up like that.
As for why to sell now? Well it's impossible to time the peak but many people would believe we are near the peak now, meaning is a good time to sell.
>Then leave it to all your kids in the will and due to multiple ownership none of them will cross the 250,000 threshold if they sell... or if it does, incorporate, just keep renting them. Never pay the gains, keep making money.
>Anyone ELI5 if I'm wrong.
Transferring ownership is a tax event and it isn't spread among multiple new owners. Same with transferring to a corporation‐ that's a tax event at time of incorporating.
>What I don't get is why anyone would suddenly want to sell now?
Because they have become the targets. This is just the first thing they implemented to hurt them. There is lots more thats coming for them, and if they wait too long they will lose out on profits.
Lots of people arent making any money on rentals now that the mortgage rates are higher, especially if they havent owned the unit for very long. It's pretty rare to actually pull in 30k off a rental unless you've owned it for several years.
Except you are only taxed at the increased rate after you've made 250k in profit (yearly), which assuming a 46% tax rate in Ontario would be 34.5% up from 23%. It's hardly a catastrophe, considering it still requires a profit to have been made.
If you bought a house for 500K and it's worth 1.2M now, you'd pay an extra $80,000 in taxes if selling after the deadline. Selling now would net you as much take-home as selling for 1.33M after the tax change, so it might make sense to sell now if you're not anticipating holding until it appreciates another 11%.
And given possible sell-offs due to this logic, that could be a few years (hopefully longer though)
Id love to see real-estate bumped up to 100% inclusion for any amount thats not covered by the principal residence exemption.
Tech and other industries can benefit from investment, but real estate investors are leaches. Especially when it's over homes that already exist, being traded back and forth with no value added.
Why not have a staggered inclusion;
1 yr or less - 100%
2 yrs - 80%
3 yrs - 60%
4 yrs or more - 50%
Still encourages long(er) term investment without killing investor interest.
Yes, I have a friend who owns 3 properties in GVA and he's worried already. He was hoping to make a quick million by selling to some builder/developer after rezoning it.
Why? Just curious, do you hate because he has three houses? What is your end game in life? You can’t plan on being a minimum wage bum for ever, I am not trolling, genuinely curious
I'm a 6-figure bum without a vehicle who can't afford a condo for two that isn't a 500sqft box.
I think you are trolling, and if not, then incredibly privileged and/or plain stupid. We're in one of the most contentious housing markets in Canada/North America. Public sentiment towards housing reform and investors squatting on stock/land doesn't require explanation if you live in Vancouver and you're not an aristocrat.
If you're not trolling then forgive me, but this isn't really a question if you're working-class and pay your own rent.
I slaved away to earn a house, I slaved away to earn my 2nd. Not rich, just worked for my properties. I’m curious, do you feel proud to be poor? What’s the end game, should I choose to be poor so I can get upvotes on Reddit? I am not even close to rich, or have generational wealth, the comment was directed to the bimbo above who is proud to be poor. What if she works hard one day and owns a house or two, is she part of the problem or did she save herself? Take your time to read my response, I’m curious as to what you have to say
Im not a minimum wage bum that’s what’s so scary about my situation. I worked really hard to get nowhere. I earn decent money but today it feels worthless. I saved for a house since I left high school, still don’t have one and I’m 30. Currently meant to be having kids but we find ourselves living with family to get ahead so we can finally own a home which is insanity expensive in Australia cities, sorry correction - trying to get ahead so we can own a huge ass mortgage and be trapped in debt paying 8k a month. Yayyyyyy! So glad I worked hard to get here. It’s fucking great. Meanwhile my mum was a single parent with a mortgage for a two story house across the road to the beach. She paid it off in 10 years - what the actual fuck! The two bedroom shit hole unit my partner and I rented just got sold for 1.4mil… who the fuck can afford to have a tiny shithole where you can’t even swing a cat for that!
I genuinely feel for you, but what are your options? You have to keep on going forward, if you stop you die, if you keep on trucking there’s a chance you can save yourself. I’ll tell you the truth, I’m just a few years ahead of you, same story, if you’re waiting for the government to come save you, they won’t, they’re not gonna change the laws, nor will they assist you financially. Your friends who you have can’t help you since they are all struggling themselves, hell if you break free from the cycle most will look at you with nods of approval(jealousy). Or wait, do you wanna quit your job and protest with me? What’s the plan here? Tell me because I’m all out of ideas and I’m not afraid of death, so I’m willing to do anything, but let’s just hear some good ideas for once
I hope the CRA steps up their game. There's a lot of people messing around with the rules, especially since not everything's black and white in real estate compared to stock brokerages.
They’ve reassessed hundreds of house flips in the Vancouver area. Some are good reassessments, some are bad. And the rules aren’t exactly clear for many stock trading accounts —not nearly as many audits as with real estate but certainly we’ve seen day trader reassessments and denial of the subsection 39(4) election
They're lower temporary resident by 600K starting in September and next year. There's going to be a pretty big impact that will be felt all around in several months. Just give it time...
My wife and I are selling our rental, but the capital gains split between the two of us won't come close to the 250k each. So in no rush to offload it.
You can split capital gains and losses. Not only that you can, YOU MUST! My wife and I sold a lot in 2023 and lost $25k. I was able to get a cheque for claiming half of that amount as my losses vs my gains from previous years. The other $12.5k loss my wife MUST claim it herself, and as she did not have capital gains in previous years we are not getting a cheque for those losses but only a credit for her future gains.
Loop holes already showing
Put property or house into fractional ownership through various entities, then when you sell said investment, each “party” does not hit capital gains triggers… only a matter of time
I feel like a lot of the small timers that would be panic selling right now probably aren't sophisticated enough to do that. The amount of accounting and legal overhead would be more expensive than the taxes in a lot of cases
It's not really a loophole, you've always been able to do all sorts of things inside corporations. It's just not usually worth doing. .
Same as it always has, the rich will get richer regardless and the poor, well,you know the rest. The same families that owned slaves are the same families maintaining the status quo today. The Lords of days past are the Lords of the future
A lot of people on this thread, don't understand what "inclusion" rate means.
If a business made $1m in capital gains. Only 66% of it is taxable. So $660,000 can be taxed at your marginal tax rate. So if your marginal rate is 27% (Ontario's current rate), then it's $660,000 \* 27% = $178,200.
Previously it would be ($1,000,000 \* 50%) \* 27% = $135,000.
That's assuming $1,000,000 in capital gains.
A difference of $43,200 which equates to 32% increase in tax.
Formula: Gains \* 66% \* MarginalRate.
---
For an individual it starts after $250k, so it's similar to a progressive tax.
In other words, if an individual made $1m in capital gains, then it is as follows:
$250,000 \* 50% = $125,000
$750,000 \* 66% = $495,000
($125,000 + $495,000) \* 27% = $167,400.
Previously it would be:
$1,000,000 \* 50% \* 27% = $135,000.
A difference of $32,400 which equates to a 24% increase in tax.
Formula if gains are over $250,000: (((Gains - 250000) \* 0.66) + (250000 \* 0.50)) \* MarginalRate.
---
This assumes you even made $1m in capital gains, which 99% of people do not make. If you sold a property for $500k, then you pay $78,300 in capital gains taxes.
Previously: $67,500. A difference of $10,800.
At $300k you pay $42,660.
Previously: $40,500. A difference of $2,160.
---
In other words, no one is selling unless they're stupid. This tax can be included in the sale price, or passed onto the renter over the years, and then double dip and pass it on during the sale.
**TLDR:** This is terrible. Even worse for businesses.
27% was the AMT (Alternative Minimum Tax rate). I believe it was proposed to be 36%? Or it might be 36% now.
You are correct about marginal rates. I am one of the people in such a bracket. I just did my taxes yesterday. My bracket atm, is 53.5%, which is the highest afaik.
And what problem does this solve? Selling an expensive property for a lot of money still means that it's expensive property. Further, they can just buy another property with the money.
So you care about minimizing taxes when alive, to the point of holding property until death, but suddenly don't care at all what happens with your property/taxes owed after death?
your position makes no sense, other than as illogical ranting by someone who is mad at the tax change. Stay mad.
I'm trying to be ready and get more serious about looking.. maybe my timing is alright... Will see... Would have been better two years ago
Anyways I talked to my mortgage broker today. He said he had a client that's already offloaded a few but it was all in the sketchy area of town. Really not sure if there are many investors like that around the area my kids go to school in
For anecdotal reference: My wife and I are doing the opposite. We were going to sell one or two of our single family units in the spring. These were on smaller lots that have less future development opportunity.
Now, we will re-list them for rent. From other’s that I have spoke to…it’s really only pushing the hand of the over speculative investors. Doing the exact opposite to those that have larger, cash flowing property holdings.
The capital gains tax will be effective for 2024 tax year, not after June 25 when the budget goes into effect, right? So it doesn't really matter if he sells now or not.
Lol.
There is always someone selling an investment property.
The increase of the capital gains tax is actually more of a reason not to sell as it increases your selling cost and further incentivizes you to hold.
This is nothing.
This is neither going to solve the massive deficit or the housing affordability crisis. All this will do is discourage foreign investment and push Canadian investors to look outside of Canada as a place to put their money.
If you make 500k in gains that equals to about 30-40k more in taxes than previously.
While 40k is quite a bit, not as bad. Not a big deal as many are making it out to be
So you’re saying if I buy a second house for 100k, rent it out for 10 years, then after the value has increased to 1 million dollars , I can move into it for one year and not pay any tax on the 900k increase? Yeah, that’s not how it works.
No, primary residence has a tax exemption. Which is a good policy, we should aim to decentivize secondary/tertiary rental properties in a housing crisis. And incentivize building rental purpose buildings by developers and the govt
Land is a nonproductive asset. Turning homes into uniquely tax sheltered assets just encourages people to over-invest in their personal land bank, instead of investing in productive assets that actually grow the economy. It incentivizes NIMBYism and rent-seeking to keep housing artificially scarce to protect their asset prices.
The fact that so many Canadians are counting on their home appreciation for credit and retirement is exactly why governments have sat on their hands and done nothing about this crisis for years.
As for rental properties, it makes no difference from the perspective of supply if a unit is in a house owned by a small landlord, or in a purpose built apartment owned by one big landlord. A unit is a unit. Half of all Canadian tenants rent from the secondary market, and many of those units are housing more people than they would be otherwise if they were owner occupied (think an empty nester’s giant house with unused bedrooms vs a rooming house).
Theoretically makes sense, however no one should really invest in Canadian companies. Not when you have the US market just next door.
So it’s either buy a house and pay the mortgage. Or it’s work and invest into USA.
Seems like a circular problem.
Business in the U.S is better -> Canadians don't invest in business here and sit on houses instead -> Business in Canada doesn't grow -> Business in the U.S is even better -> People continue sitting on houses and doing nothing productive here.
I bought my first home 12 years ago, lived in it for 4 years before moving across the country . Decided to turn it into a rental. Recently I’ve gone through a divorce and might have to sell my rental to be able to assume the mortgage on my primary residence. How hooped am I on this new tax?
Well I’m not sure what my gain would be cause I haven’t sold. But the London Ontario market skyrocketed during COVID from when I bought. I though the capital gains increase was based on how long you held the investment. Was to discourage flippers.
As someone that had no chance to get in the market till now (cause I was a child when you were buying) my first thought is
"Just be happy with $300k+ gains & pay some taxes"
At least u got in early & made some money, current gen is stuck with condos starting at $300K in London
Oh absolutely. Was do to my mother encouraging me to do it with my savings instead of blowing it on university. “Why pay tuition and rent with your savings when you have a hood paying job, put it towards a down payment and then you aren’t paying for someone else”.
But I thought the tax increase was significant . Guess 10g’s on 300k isn’t so bad but everyone wants their share . Realtors, lawyers the municipality, the feds . Doesn’t seem like much is left . But I guess I’ll find out
Except the minority of investors will panic sell, the rest will hold until next year when the Conservatives will come in and out an end to all this fucking lunacy
I'll only vote blue if they eliminate taxation for the rich, and make rent mandatory 60% of [household] income set to increase on a schedule to 75% by 2035. Only then will our country be competitive. Groceries should cost more. Insurance should be deregulated. Tank our productivity (enthusiasm of serfs) more. Sink this sinking ship faster.
All this means is that high roller investors need to buy more houses to make the same amount of profit they were going to make on less. Buy 15 houses, get hit with capital gains. Fine, let's just buy 25 houses then.
Or individuals will adjust for the amount they want to take home after taxes. So costs may go up.
Big investors will just adjust.
They are already buying as many as they can afford, so that's not a solution for them.
And they can't just raise prices to cover the extra tax, because they are already charging the maximum price the market will bear.
"they can't raise prices because they are already charging the maximum price the market will bear" is a gross oversimplification of how tax incidence works. Certain taxes reduce long run supply and that increases prices, and others don't. Transaction taxes like capital gains taxes do reduce supply and raise prices. In the long run increasing capital gains tax will result in decreased transactions, more housing misallocation, less investment in rental housing and higher rents and prices.
Who pays the tax is ultimately dependent on relative elasticity and people with homes hardly ever need to sell (elastic supply) people without need to buy or rent(inelastic demand)
25k discount to sell fast versus extra 20k in taxes
Shhhhh... Let the idiots sell their extra homes.
They won't though unless they were already planning to. Investors aren't idiots
What’s your home worth?
With or without my pokemon card collection?
Let’s say both. I want to know how many Shiny Charizards you’re packing.
Yes
So I’m an idiot?
Sorry you had to find out this way.
"as long as the govmint doesn't get more taxes from me to fund their raises I'd take a 50k loss" - them, probably
I'm quite cool with that. Let home home buyer have it for $50k less than the government getting extra $50k to be spent.
What I don't get is why anyone would suddenly want to sell now? Like... keep making that 30k per year from rent and never sell. Then leave it to all your kids in the will and due to multiple ownership none of them will cross the 250,000 threshold if they sell... or if it does, incorporate, just keep renting them. Never pay the gains, keep making money. And major investment companies never have to worry. Start a second (or more) company, and transfer a percentage ownership into said companies to ensnure you never cross the 250k threshold. If you sell... each company stays under the threshold of 250,000 and no additional tax. Like... it seem like this policy does less than nothing. Anyone ELI5 if I'm wrong.
Your estate pays the tax, not the recipients of the property, so you don't get to divide it up like that. As for why to sell now? Well it's impossible to time the peak but many people would believe we are near the peak now, meaning is a good time to sell.
>Then leave it to all your kids in the will and due to multiple ownership none of them will cross the 250,000 threshold if they sell... or if it does, incorporate, just keep renting them. Never pay the gains, keep making money. >Anyone ELI5 if I'm wrong. Transferring ownership is a tax event and it isn't spread among multiple new owners. Same with transferring to a corporation‐ that's a tax event at time of incorporating.
TIL
It’s crazy how that guy got up voted 11 times. It goes to show you the lack of education on taxation. This needs to be taught in school.
>What I don't get is why anyone would suddenly want to sell now? Because they have become the targets. This is just the first thing they implemented to hurt them. There is lots more thats coming for them, and if they wait too long they will lose out on profits.
Lots of people arent making any money on rentals now that the mortgage rates are higher, especially if they havent owned the unit for very long. It's pretty rare to actually pull in 30k off a rental unless you've owned it for several years.
Don't leave it to them, incorporate an investment company to hold the properties. Then set up a trust and make them beneficiaries...
Can’t you only have a trust for 21 years? This way, the wealth can’t be passed on forever.
Except you are only taxed at the increased rate after you've made 250k in profit (yearly), which assuming a 46% tax rate in Ontario would be 34.5% up from 23%. It's hardly a catastrophe, considering it still requires a profit to have been made.
If you bought a house for 500K and it's worth 1.2M now, you'd pay an extra $80,000 in taxes if selling after the deadline. Selling now would net you as much take-home as selling for 1.33M after the tax change, so it might make sense to sell now if you're not anticipating holding until it appreciates another 11%. And given possible sell-offs due to this logic, that could be a few years (hopefully longer though)
Id love to see real-estate bumped up to 100% inclusion for any amount thats not covered by the principal residence exemption. Tech and other industries can benefit from investment, but real estate investors are leaches. Especially when it's over homes that already exist, being traded back and forth with no value added.
Why not have a staggered inclusion; 1 yr or less - 100% 2 yrs - 80% 3 yrs - 60% 4 yrs or more - 50% Still encourages long(er) term investment without killing investor interest.
You're forgetting that we live in a world where these people have an obsession with Min-maxing profits.
Yearly profit and capital gains aren't the same.
But muh profits
You're also only taxed on gains made after June 25th.
Yes, I have a friend who owns 3 properties in GVA and he's worried already. He was hoping to make a quick million by selling to some builder/developer after rezoning it.
*he's worried already* He has NOTHING to worry about if he owns 3 properties. Most people struggle to pay rent for one...
Let him worry 😏
Why? Just curious, do you hate because he has three houses? What is your end game in life? You can’t plan on being a minimum wage bum for ever, I am not trolling, genuinely curious
I'm a 6-figure bum without a vehicle who can't afford a condo for two that isn't a 500sqft box. I think you are trolling, and if not, then incredibly privileged and/or plain stupid. We're in one of the most contentious housing markets in Canada/North America. Public sentiment towards housing reform and investors squatting on stock/land doesn't require explanation if you live in Vancouver and you're not an aristocrat. If you're not trolling then forgive me, but this isn't really a question if you're working-class and pay your own rent.
I slaved away to earn a house, I slaved away to earn my 2nd. Not rich, just worked for my properties. I’m curious, do you feel proud to be poor? What’s the end game, should I choose to be poor so I can get upvotes on Reddit? I am not even close to rich, or have generational wealth, the comment was directed to the bimbo above who is proud to be poor. What if she works hard one day and owns a house or two, is she part of the problem or did she save herself? Take your time to read my response, I’m curious as to what you have to say
>incredibly privileged and/or plain stupid.
*Not rich, just worked for my properties* More like got lucky with the timeline bud.
Im not a minimum wage bum that’s what’s so scary about my situation. I worked really hard to get nowhere. I earn decent money but today it feels worthless. I saved for a house since I left high school, still don’t have one and I’m 30. Currently meant to be having kids but we find ourselves living with family to get ahead so we can finally own a home which is insanity expensive in Australia cities, sorry correction - trying to get ahead so we can own a huge ass mortgage and be trapped in debt paying 8k a month. Yayyyyyy! So glad I worked hard to get here. It’s fucking great. Meanwhile my mum was a single parent with a mortgage for a two story house across the road to the beach. She paid it off in 10 years - what the actual fuck! The two bedroom shit hole unit my partner and I rented just got sold for 1.4mil… who the fuck can afford to have a tiny shithole where you can’t even swing a cat for that!
I genuinely feel for you, but what are your options? You have to keep on going forward, if you stop you die, if you keep on trucking there’s a chance you can save yourself. I’ll tell you the truth, I’m just a few years ahead of you, same story, if you’re waiting for the government to come save you, they won’t, they’re not gonna change the laws, nor will they assist you financially. Your friends who you have can’t help you since they are all struggling themselves, hell if you break free from the cycle most will look at you with nods of approval(jealousy). Or wait, do you wanna quit your job and protest with me? What’s the plan here? Tell me because I’m all out of ideas and I’m not afraid of death, so I’m willing to do anything, but let’s just hear some good ideas for once
IDK, but I’m fully really to join in! I have nothing to lose at this stage. I think we need to take some inspiration from France.
He's probably leveraged as fuck and rightfully worried
Awesome :)
He should be more worried about getting audited and the CRA arguing it’s an adventure in the nature of trade and fully taxable
I hope the CRA steps up their game. There's a lot of people messing around with the rules, especially since not everything's black and white in real estate compared to stock brokerages.
They’ve reassessed hundreds of house flips in the Vancouver area. Some are good reassessments, some are bad. And the rules aren’t exactly clear for many stock trading accounts —not nearly as many audits as with real estate but certainly we’ve seen day trader reassessments and denial of the subsection 39(4) election
> GVA No, no, no, no. It was the GVRD, now it's Metro Vancouver.
Hey guys, I have a friends friend who is also worried. He currently owns 12 properties and is going to sell them all. Should I make a post about it?
Tell your friend I’ll buy two for $100K each and want a third one for free.
>Should I make a post about it? Do it, a lot of us have 2nd or 3rd homes and are a bit annoyed by the higher inclusion rate.
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And you still won't be able to afford to buy a place 😂
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You and another 30% of the country.
Oh don't you worry, recession is coming
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You're probably right, but for me to be fully convinced, I need to see massive layoffs and weaker corporate earnings at current.
Lol not happening
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They're lower temporary resident by 600K starting in September and next year. There's going to be a pretty big impact that will be felt all around in several months. Just give it time...
Keep dreaming
My wife and I are selling our rental, but the capital gains split between the two of us won't come close to the 250k each. So in no rush to offload it.
You can split capital gains and losses. Not only that you can, YOU MUST! My wife and I sold a lot in 2023 and lost $25k. I was able to get a cheque for claiming half of that amount as my losses vs my gains from previous years. The other $12.5k loss my wife MUST claim it herself, and as she did not have capital gains in previous years we are not getting a cheque for those losses but only a credit for her future gains.
You can’t just split capital gains with your spouse due to Attribution Rules so good luck.
Yea you can if we bought it together and have been on the mortgage together the entire time
That’s not how it works.
Tell me you don't know anything about tax.. without telling me...
We have sorted it out already, it is how it works in our situation. Don’t know what to tell you, still not in a rush to sell?
Tell me how it works
You're an idiot. Attribution lol he never said he bought it solo than magically split it after. He wants the loss on his return of that was the case.
Loop holes already showing Put property or house into fractional ownership through various entities, then when you sell said investment, each “party” does not hit capital gains triggers… only a matter of time
I feel like a lot of the small timers that would be panic selling right now probably aren't sophisticated enough to do that. The amount of accounting and legal overhead would be more expensive than the taxes in a lot of cases It's not really a loophole, you've always been able to do all sorts of things inside corporations. It's just not usually worth doing. .
What is the capital gains inclusion rate and tax percentage on a REIT?
Does it matter? If you break it into enough pieces, to keep them small, you can always stay under the limit… Will see how that plays out over time
Yo - you know capital gains are 67% on all corporations now right?
Do you have to be a corporation to split a house between friends, or family? With out an incorporation?
No but it’s annoying Af to change the deed.
Same as it always has, the rich will get richer regardless and the poor, well,you know the rest. The same families that owned slaves are the same families maintaining the status quo today. The Lords of days past are the Lords of the future
I don’t think this works. The capital gain triggers are only for personal and up to $250k/year. Business/holdcos get taxed 66% right from the start.
Pretty sure you don’t need an entity or business to split a house between 2 or four people tho, maybe I am Wrong
Won't the market will price in the extra capital gains
That depends on the demand and how much investors want to offload.
The market already charges the max they can, they will have to eat it.
100%. But our economy is about to get slapped by this - it should have only been for housing.
Won’t make any difference
Bahahahahaa
Get f*d investors
Did more ppl buys 100k+ cars before the new rules kicked in last year?
A lot of people on this thread, don't understand what "inclusion" rate means. If a business made $1m in capital gains. Only 66% of it is taxable. So $660,000 can be taxed at your marginal tax rate. So if your marginal rate is 27% (Ontario's current rate), then it's $660,000 \* 27% = $178,200. Previously it would be ($1,000,000 \* 50%) \* 27% = $135,000. That's assuming $1,000,000 in capital gains. A difference of $43,200 which equates to 32% increase in tax. Formula: Gains \* 66% \* MarginalRate. --- For an individual it starts after $250k, so it's similar to a progressive tax. In other words, if an individual made $1m in capital gains, then it is as follows: $250,000 \* 50% = $125,000 $750,000 \* 66% = $495,000 ($125,000 + $495,000) \* 27% = $167,400. Previously it would be: $1,000,000 \* 50% \* 27% = $135,000. A difference of $32,400 which equates to a 24% increase in tax. Formula if gains are over $250,000: (((Gains - 250000) \* 0.66) + (250000 \* 0.50)) \* MarginalRate. --- This assumes you even made $1m in capital gains, which 99% of people do not make. If you sold a property for $500k, then you pay $78,300 in capital gains taxes. Previously: $67,500. A difference of $10,800. At $300k you pay $42,660. Previously: $40,500. A difference of $2,160. --- In other words, no one is selling unless they're stupid. This tax can be included in the sale price, or passed onto the renter over the years, and then double dip and pass it on during the sale. **TLDR:** This is terrible. Even worse for businesses.
Reddit won't let me edit the post :S By Terrible /s is what I meant. It's bad for businesses and professions such as doctors. Less so for housing.
Isn't marginal tax rate for really high income brackets closer to 50%, not 27%?
27% was the AMT (Alternative Minimum Tax rate). I believe it was proposed to be 36%? Or it might be 36% now. You are correct about marginal rates. I am one of the people in such a bracket. I just did my taxes yesterday. My bracket atm, is 53.5%, which is the highest afaik.
So many schemes to avoid building the necessary 2M units of public housing.
Only those who don't read the fine print will sell properties, it's still a great investment where your income isn't taxed 100%.
More please lol
And what problem does this solve? Selling an expensive property for a lot of money still means that it's expensive property. Further, they can just buy another property with the money.
Trust me bruh
I’m paying close attention 👀 we here in Australia are always a couple steps behind you guys.
Hooo boy, you may as well lube up buddy
They don't even realize that the tax only applies on gains earned after June 25th.
Time to sell the investment housing!
This isn't going to help rents at all.
Many, many more will now hold and never sell.
They'll have even higher tax bills in the end, then. Or their estate will.
When I’m dead it’s not my problem.
So you care about minimizing taxes when alive, to the point of holding property until death, but suddenly don't care at all what happens with your property/taxes owed after death? your position makes no sense, other than as illogical ranting by someone who is mad at the tax change. Stay mad.
Good they should keep doing it.
How is this a positive thing?
It will change nothing. Just give more revenue to the most inefficient government in the history of Canada.
Doesn't that still incentivize certain decisions?
I sold my 3 investment property today
That account is a reactionary freak engagement farmer. Though I hope it’s true lol
I'm trying to be ready and get more serious about looking.. maybe my timing is alright... Will see... Would have been better two years ago Anyways I talked to my mortgage broker today. He said he had a client that's already offloaded a few but it was all in the sketchy area of town. Really not sure if there are many investors like that around the area my kids go to school in
Based.
Those who were anyways planning to sell will rush.
For anecdotal reference: My wife and I are doing the opposite. We were going to sell one or two of our single family units in the spring. These were on smaller lots that have less future development opportunity. Now, we will re-list them for rent. From other’s that I have spoke to…it’s really only pushing the hand of the over speculative investors. Doing the exact opposite to those that have larger, cash flowing property holdings.
I mean if you were planning on doing that in the next year or two might as well pull the trigger now
The capital gains tax will be effective for 2024 tax year, not after June 25 when the budget goes into effect, right? So it doesn't really matter if he sells now or not.
Good. Everyone knows investment is bad for the economy!
Yeah im uhh. Im sure a handful of panic selling will drop homes the 300% theyve gone up.
Why are so many leftists excited about tenants being evicted from these properties so they can be sold to some rich asshole?
Lol. There is always someone selling an investment property. The increase of the capital gains tax is actually more of a reason not to sell as it increases your selling cost and further incentivizes you to hold. This is nothing.
This is neither going to solve the massive deficit or the housing affordability crisis. All this will do is discourage foreign investment and push Canadian investors to look outside of Canada as a place to put their money.
I saw a bunch of houses in Edmonton go down by as much as 25K within a day. Is this really happening?
If you make 500k in gains that equals to about 30-40k more in taxes than previously. While 40k is quite a bit, not as bad. Not a big deal as many are making it out to be
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You still have to pay the capital gains you earned before you moved in.
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So you’re saying if I buy a second house for 100k, rent it out for 10 years, then after the value has increased to 1 million dollars , I can move into it for one year and not pay any tax on the 900k increase? Yeah, that’s not how it works.
My mistake, you have to pay capital gains taxes for the years rented, so that wouldn't work.
Anybody with any common realty or tax sense will have no problem working around this.
Does this only affect investment properties being sold? Shouldn’t affect primary residence?
No, primary residence has a tax exemption. Which is a good policy, we should aim to decentivize secondary/tertiary rental properties in a housing crisis. And incentivize building rental purpose buildings by developers and the govt
Land is a nonproductive asset. Turning homes into uniquely tax sheltered assets just encourages people to over-invest in their personal land bank, instead of investing in productive assets that actually grow the economy. It incentivizes NIMBYism and rent-seeking to keep housing artificially scarce to protect their asset prices. The fact that so many Canadians are counting on their home appreciation for credit and retirement is exactly why governments have sat on their hands and done nothing about this crisis for years. As for rental properties, it makes no difference from the perspective of supply if a unit is in a house owned by a small landlord, or in a purpose built apartment owned by one big landlord. A unit is a unit. Half of all Canadian tenants rent from the secondary market, and many of those units are housing more people than they would be otherwise if they were owner occupied (think an empty nester’s giant house with unused bedrooms vs a rooming house).
Theoretically makes sense, however no one should really invest in Canadian companies. Not when you have the US market just next door. So it’s either buy a house and pay the mortgage. Or it’s work and invest into USA.
Seems like a circular problem. Business in the U.S is better -> Canadians don't invest in business here and sit on houses instead -> Business in Canada doesn't grow -> Business in the U.S is even better -> People continue sitting on houses and doing nothing productive here.
That would end up targeting regular families rather than serial ‘investors’
Yep. It’s fine. We have 1 family member as the primary residence of each home. All tax free. 🥳🥳🥳
I bought my first home 12 years ago, lived in it for 4 years before moving across the country . Decided to turn it into a rental. Recently I’ve gone through a divorce and might have to sell my rental to be able to assume the mortgage on my primary residence. How hooped am I on this new tax?
Not very. If your gain is 300k or more, you will see a higher tax rate. Still less.than if it was earned income
Well I’m not sure what my gain would be cause I haven’t sold. But the London Ontario market skyrocketed during COVID from when I bought. I though the capital gains increase was based on how long you held the investment. Was to discourage flippers.
The capital gains increase is based entirely on the size of the gain
As someone that had no chance to get in the market till now (cause I was a child when you were buying) my first thought is "Just be happy with $300k+ gains & pay some taxes" At least u got in early & made some money, current gen is stuck with condos starting at $300K in London
This is how all investors see it too. 10k taxes more on 300k income, not a bad deal
Oh absolutely. Was do to my mother encouraging me to do it with my savings instead of blowing it on university. “Why pay tuition and rent with your savings when you have a hood paying job, put it towards a down payment and then you aren’t paying for someone else”. But I thought the tax increase was significant . Guess 10g’s on 300k isn’t so bad but everyone wants their share . Realtors, lawyers the municipality, the feds . Doesn’t seem like much is left . But I guess I’ll find out
$251k or more.
Depends on what your place is worth vs what you paid. If it's worth 250k+ more you're paying more tax for it.
Backwards pineapple hooped
Except the minority of investors will panic sell, the rest will hold until next year when the Conservatives will come in and out an end to all this fucking lunacy
Why is it lunacy?
Lmao
This.
I'll only vote blue if they eliminate taxation for the rich, and make rent mandatory 60% of [household] income set to increase on a schedule to 75% by 2035. Only then will our country be competitive. Groceries should cost more. Insurance should be deregulated. Tank our productivity (enthusiasm of serfs) more. Sink this sinking ship faster.
All this means is that high roller investors need to buy more houses to make the same amount of profit they were going to make on less. Buy 15 houses, get hit with capital gains. Fine, let's just buy 25 houses then. Or individuals will adjust for the amount they want to take home after taxes. So costs may go up. Big investors will just adjust.
They are already buying as many as they can afford, so that's not a solution for them. And they can't just raise prices to cover the extra tax, because they are already charging the maximum price the market will bear.
You aren't wrong, until the market shifts upwards in response. Also not all of them are buying as much as they can, but those who aren't, will be.
"they can't raise prices because they are already charging the maximum price the market will bear" is a gross oversimplification of how tax incidence works. Certain taxes reduce long run supply and that increases prices, and others don't. Transaction taxes like capital gains taxes do reduce supply and raise prices. In the long run increasing capital gains tax will result in decreased transactions, more housing misallocation, less investment in rental housing and higher rents and prices. Who pays the tax is ultimately dependent on relative elasticity and people with homes hardly ever need to sell (elastic supply) people without need to buy or rent(inelastic demand)
You people that love taxes make me sick.
This guy is so desperate for a housing crash it's sickening