Home equity tax
Recently my email inbox, as well as a significant number of calls to my office have raised significant opposition to a proposed annual home equity tax.
The overwhelming feedback on this topic has come somewhat as a surprise to me as this what not a major media story nor have I raised this topic in a weekly report.
Because of the level of responses I have received to this proposed homeowners equity tax will be the focus of this week's report.
First off – what is it?
Recently a Canadian Mortgage and Housing Corporation (CMHC) funded report from a group known as “Generation Squeeze”.
This report recommended an annual home equity tax on residences values in excess of $1 million dollars or more.
The proposed tax would be 0.2% for homes with a value between $1 million up to $1.5 million and would increase again to 0.5% up to $2 million and would ultimately increase to 1% on homes valued over $2 million payable annually like income taxes.
What if you could not afford to pay the annual home equity tax?
The program would be designed to defer the balance owing with a rate of interest charged on the outstanding balance.
The idea being the balance owing would be paid when the home is sold, or title transferred through an inheritance.
How does this make housing more affordable?
In theory the government would use this tax revenue to invest in affordable housing.
The report's author also believes it would create a disincentive for those who invest in housing for a monetary return.
To be candid I oppose this tax proposal.
As has already been shared with me, there are citizens who now find themselves living in homes with a value in excess of a million dollars and would be subject to such a tax despite not having purchased a “million dollar home”.
As these individuals point out, they could never afford to purchase a million-dollar home.
On the surface they can “sell” and cash in on the increase in their home value but as has been pointed out, with the average price of a home in Kelowna now over $1 million, it is pointless as your gains would be wiped out trying to purchase in the current market.
As we have seen large jumps in home values throughout BC in recent years, it would be only a matter of time before more and more households qualify to pay this tax regardless of their household income.
It has also been pointed out that selling a million-dollar home in itself negatively can impact your equity as real estate commissions and the BC property purchase tax are much higher on homes with a value in this price range.
As one individual shared with my office, they are only a “millionaire” homeowner on paper and could not afford to sell and buy another home at the current market rates as it is all relative.
I have heard other reasons why citizens are opposed to this idea.
One common question is what happens in the event that housing markets decline, having a natural effect on reducing your home equity, when at the same time the home equity tax you owe would continue to increase.
There is also a challenge when the value of the home you own does not necessarily accurately reflect your household income and by extension the ability to pay a home equity tax.
From own perspective I don’t believe the Government has a revenue problem that requires a home equity tax.
The challenge is spending.
As one example, our current Liberal Government has invested in the Asian Infrastructure Investment Bank.
I believe our shares in this bank should be sold and those funds would be better spent investing here in Canada, building Canadian infrastructure.
Final and important point.
The Liberal Government has stated that they will not be implementing this home equity tax.
My question this week:
Do you support the idea of a home equity tax to fund affordable housing?
I can be reached at Dan.Albas@parl.c.ca or call toll free 1-800-665-8711.
1/14/2022 04:19:33 pm
This tax will do nothing to make housing more affordable, it will do the opposite, homeowners will pass along this cost to potential buyers…NO MORE TAXES!! Canadians pay enough, stop the out of control spending, stop the hand outs , give small businesses some tax breaks so they can have a hope of surviving and start training thousands of young people to go into a trade so we can build more homes and if we build more homes the affordability will truly begin. I don’t mean more homes in urban areas either, there are small towns all across Canada that are dying because there are no jobs…build houses there, the jobs will be plentiful!
2/3/2022 09:44:15 pm
Hello I have just been made aware of this potential home equity tax and I firmly oppose this tax. The liberal government needs to stop spending our hard earned money in other countries and not putting Canadians first. I am in total opposition of the liberal government as it does not serve the Canadian people and I would prefer Justin Trudeau to resign as he is only looking out for his own interest and has brought nothing but division in our Canada. Step down Justin Trudeau. You are the one that is spreading hate and division. Your antics are disgusting and I never voted you in and I don’t know anyone who voted you in. So how did you get to be prime minister again??? If you so like communism perhaps you should go to the CCP and join them and have your fill of it, but mark my words Canadians want no part of it! You do not represent Canadians and our values as a free nation. We have God on our side and He gave us our freedoms and you will never take that away from us Canadians!
4/21/2022 07:33:12 pm
How many other possible ways can Trudeau & Freeland come up with to tax us Canadians. This is totally ridiculous and almost at the point of moving out of Canada. Liberal party has to go ASAP. Trudeau has to stop his out of control spending. Maybe cut free 20% of all government employees and cut government expenses. Our country is close to 50% of working class working in a government position. O yes and they want a 4 day work week. What has happened to Canada since Trudeau became PM. Slowly and building momentum going down the toilet. Come on people, this dictator has to go
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Dan Albas is the Member of Parliament for the riding of Central Okanagan-Similkameen-Nicola.
Central Okanagan – Similkameen – Nicola