The Canadian Taxpayers Federation (CTF) is sounding the alarm about a federally funded study into taxing the sale of homes.
“Both the Liberals and Conservatives just spent the last election promising Canadians that they wouldn’t hit us with a home equity tax,” said CTF federal director Franco Terrazzano on Wednesday.
“Now we find out that the government is using our tax dollars to dream up new ways to tax Canadian homeowners and that’s unacceptable.”
Terrazzano said politicians should “build more homes with hammers, not tax hikes.”
The study was released Wednesday by Generation Squeeze, an organization that has frequently pushed for a home sale tax.
Their recommendations include targeting the “housing wealth windfalls gained by many home owners while they sleep and watch TV.”
The report was funded by taxpayers through the Canadian Mortgage and Housing Corporation (CMHC). This home sale tax, the report argues, would be an annual surtax of 0.2% to 1% of the value of a home beyond a million-dollar threshold, accumulating until it is sold or inherited.
At a rate of 0.5%, an average home in Vancouver or Toronto that is sold after 10 years of ownership could face a new tax of close to $10,000.
“It’s very easy to be living in a home assessed at more than a million dollars in Vancouver and Toronto, so this is going to hit homeowners and potential home buyers hard,” said CTF B.C. director Kris Sims. “This could increase the listing prices of homes because this tax will just be tacked on.”
The report estimates this home sales tax could cost Canadians $5.8 billion per year. That amount would cover less than five days of the Trudeau government’s spending.
The CMHC spent $250,000 in 2020 on a study that examined home equity and capital gains taxes on main residences.
Generation Squeeze has called for the government to increase taxes on property wealth because they say it will contribute to more affordable housing. The group recommends this tax increase be done through higher annual property taxes, deferrable surtaxes or capital gains taxes.
The sale of a primary residence – the only home a person owns and lives in – has been tax-free in Canada since the 1970s.