In order to bridge the affordability gap, a Vancouver-based think-tank is calling on the government to introduce a new tax on homes valued at over $1 million.
After the pandemic began in March 2020, the Canadian housing market went ice cold, but soon caught fire and spent much of 2021 on fire. Although the market has been going at a torrid pace, numerous alternatives have been proposed, but none has been able to slow the runaway freight train even where they have been tried – like taxing vacant homes, flippers, and foreign investors, or ending blind bidding.
This group proposes a progressive tax that would kick in at $1 million of value, and increase at $3 million of value and above. This would function similarly to land transfer taxes which are currently imposed by many municipalities and provinces. Although the tax would be calculated annually, it would be deferred until the house is sold.
These measures may be aimed at Toronto and Vancouver, it will do little to fix affordability in areas of the country where $1 million homes are unheard of. These taxes and policies could have significant unintended consequences.
The government made it clear to the Canadian Press this week that it is not in favor of any new taxes on owners.
So if there is skepticism, if there’s no actual evidence this could help, can exposing this sort of evidence and idea to real estate clients push for a change? Would you present an idea such as this one to your clients?
What do you think?