{"id":931,"date":"2022-05-09T01:15:42","date_gmt":"2022-05-09T01:15:42","guid":{"rendered":"https:\/\/www.realestateleads.ca\/blog\/?p=931"},"modified":"2023-09-25T22:17:21","modified_gmt":"2023-09-25T22:17:21","slug":"short-term-taxation-measures-on-homeowners-could-be-deal-breaker-for-buyers","status":"publish","type":"post","link":"https:\/\/www.realestateleads.ca\/blog\/short-term-taxation-measures-on-homeowners-could-be-deal-breaker-for-buyers\/","title":{"rendered":"Short-Term Taxation Measures on Homeowners Could Be Deal-Breaker for Buyers"},"content":{"rendered":"
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Government intervention in the housing market is the hottest topic around these days, and when you have a country with so much of its GDP in real estate it\u2019s not surprising that you have the skyrocketing price appreciations and real apprehension on the part of policy makers to be messing with something that in the big picture is quite integral to keeping the ship afloat. It\u2019s certainly not a beneficial reality, but it is the path that was chosen for Canada a long time ago.<\/p>\r\n\r\n\r\n\r\n

So in the here and now of 2022 it is what it is, but we shouldn\u2019t expect the constituents and their outcries about housing affordability to be diminishing anytime soon. As is always the case elected officials need to be receptive to the wishes of those constituents, and what they are asking is for housing to be more affordable than it is now. Easier said than done? You bet it is and as we\u2019ve gone about at length here there is no fix to this if demand continues to way outstrip supply and the country\u2019s population continues to grow by hundreds of thousands of people each year.<\/p>\r\n\r\n\r\n\r\n

Another reality that there\u2019s no escaping is that fewer qualified buyers and more money than ever chasing after goods, services, and commodities it makes things difficult for people who have only just recently begun to work as realtors. Many would-be clients will be reaching out to established agents to help them, but with our online real estate lead generation system here at Real Estate Leads they will have a leg up on that and be directly connected with these same individuals or couples.<\/p>\r\n\r\n\r\n\r\n

Concerns Across the Board<\/strong><\/h3>\r\n\r\n\r\n\r\n

Recent survey results from RE\/MAX Canada finds that 78% of Canadians have taxation, interest rates, economic recession, climate change, mixed housing, and\/or public transportation as very real concerns, with some of them saying these factors may influence their home-buying prerogatives over the next five years.<\/p>\r\n\r\n\r\n\r\n

With that understood, let\u2019s start by considering that 2020 saw the Canadian economy experiencing a 5.2% decline. That was buttressed some by 4.6% growth in 2021. But now we have the Government realizing they have had no choice but to raise interest rates to combat inflation, and most economists will tell you they\u2019ve been artificially low for way too long if we\u2019re going to be right honest about it.<\/p>\r\n\r\n\r\n\r\n

All of this comes in stride with demand for new housing starts as demanded by the populous. With the influx of immigration expected in the coming years and the Fed\u2019s goal to welcome 432,000 immigrants in 2022, we are going to see demand go through the roof with our housing market and \u2013 as always – Vancouver and Toronto will take the brunt of it all on the chin. With massively rising demand, how can affordability still exist? Is taxing existing homeowners on the value of their home a possibility?<\/p>\r\n\r\n\r\n\r\n

Real Life Investment in Real Estate<\/strong><\/h3>\r\n\r\n\r\n\r\n

Well, despite the moral impropriety of that suggestion and the fact it would create (legitimately) a massive outcry from people who have worked hard and are looking forward to using their home equity for retirement, this is what some are actually suggesting. The Canadian housing market has historically given homeowners great long-term returns and solid financial security, and so the smart move would be to have governments and policy makers taking a more collaborative approach that takes the worries Canadians have when it comes to home ownership into account.<\/p>\r\n\r\n\r\n\r\n

Respondents to the survey responded in the exact same way that anyone would expect they would in the face of heavy-handed government intervention in a market where so many people are life-invested in what they have their money in there. 64% have concerns about rising property-related taxes. 58% have concerns about ongoing home affordability with a mortgage in the face of the rising interest rates.<\/p>\r\n\r\n\r\n\r\n

But most notable is that more than half (55%) are concerned \u2013 and likely borderline offended \u2013 at the idea of a capital gains tax on primary residences. Now to be fair the current Liberal government has said this type of tax is not<\/em><\/strong> something they are considering, but let\u2019s not lose track of the fact that Liberal Governments have a decades-on-decades track record of saying one thing and doing another. Anything for votes after all.<\/p>\r\n\r\n\r\n\r\n

The Great Dissuader?<\/strong><\/h3>\r\n\r\n\r\n\r\n

Economists and level-headed real estate market experts will tell you that economic decision-makers should instead make pragmatic and evidenced-based decisions that do not penalize Canadians. And instead incentivize then with regards to interest rates, immigration and taxation. That is the approach that will help the housing market be stable over the next decade, even if it doesn\u2019t become inexpensive in the way some hope it will.<\/p>\r\n\r\n\r\n\r\n

So what would the realities be if the capital gains tax exemption was removed? For starters it would upend the retirement plans of millions of Canadians who plan to cash in on the full gains from the sale of their principal home to fund their retirement. Which, of course, is the way it should be and the way it\u2019s been for generations.<\/p>\r\n\r\n\r\n\r\n

What WILL happen is that a) fewer homeowners will sell their home on the same timeline they would otherwise, and b) homeowners will list their homes for higher amounts to cover the difference they\u2019ll be expected to pay in capital gains tax to the government. And they\u2019ll do that knowing that bidding wars will still mean their home will sell for over asking at any price because \u2013 again- demand exceeds supply in Canada in a way that is unmatched in any G7 country in the world.<\/p>\r\n\r\n\r\n\r\n

Would there be an initial surge of properties on the market put there by sellers who were planning to sell already and hoping to avoid the tax before it is implemented? Absolutely, but that\u2019s it as far as positive ramifications. After that there will be nothing positive to come of it at all, and you can be darn sure that hardworking and financially responsible Canadians who have worked hard to have the equity in their home that they do will not be voting Liberal next time around.<\/p>\r\n\r\n\r\n\r\n

For what it\u2019s worth, that would be a smart choice no matter what transpires around removing a capital gains tax exemption on principal residences.<\/p>\r\n\r\n\r\n\r\n

__<\/p>\r\n\r\n\r\n\r\n

Sign up for Real Estate Leads here<\/a> and receive a monthly quota of qualified, online-generated buyer and \/ or seller leads<\/a> that are delivered to you as the only real estate agent who is to receive them. This exclusivity is exactly what makes this system so advantageous, as you will have the opportunity to be first in touch with these people and impressing upon them that you have the expertise with real estate they need to buy and sell with confidence. It is a proven way to supercharge your client prospecting efforts and you\u2019ll quickly see that for yourself.<\/p>\r\n","protected":false},"excerpt":{"rendered":"

Government intervention in the housing market is the hottest topic around these days, and when you have a country with so much of its GDP in real estate it\u2019s not surprising that you have the skyrocketing price appreciations and real apprehension on the part of policy makers to be messing with something that in the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-931","post","type-post","status-publish","format-standard","hentry","category-general-topics"],"yoast_head":"\nShort-Term Taxation Measures on Homeowners Could Be Deal-Breaker for Buyers - Real Estate Leads Blog<\/title>\n<meta name=\"description\" content=\"Short-Term Taxation Measures on Homeowners Could Be Deal-Breaker for Buyers - 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