Proposed tax on $1 million homes appears to be non-starter

January 17, 2022



A report from a group partly funded by Canada Mortgagee Housing Corp. (CMHC) is calling for tax on homes priced at $1 million or more.
Critics are calling it the first capital gains tax on principal residences, but government sources told Home BUILDER that the home equity tax is a non-starter.
Advocacy group Generation Squeeze released the report entitled Housing Wealth and Generational Inequity, which explored policy incentives to solve Canada’s “housing unaffordability crisis.”
The report was authored by Dr. Paul Kershaw, founder of Generation Squeeze and a University of British Columbia professor in the School of Population & Public Health, and was funded in part by CMHC and National Housing Strategy.
Among the recommendations was the call for a tax that would range from 0.2 per cent for homes valued between $1 million to $1.5 million, and up to 1 per cent on homes valued over $2 million.
The annual tax would be deferrable, meaning the accumulated total would not have to be paid until the home is sold or inherited. According to the report, a home valued at between $1 to 1.5 million would incur an average annual surtax of $408, while a home valued at over $2 million would average an annual tax payment of $14,710.
This means that after 10 years of ownership the tax could range from more than $4,000 to nearly $150,000.
Such a tax would impact virtually every homeowner in Metro Vancouver and Greater Toronto, where the composite home price is in excess of $1 million.
Reaction to the Generation Squeeze report was swift—and not all of it positive.
A spokesman for CMHC told Home BUILDER that the housing agency is not committed to proposals from Generation Squeeze.
“There is no requirement for the Government of Canada or CMHC to adopt any of the proposals in the solutions lab’s final report. CMHC is not responsible for the views and proposals included in the lab’s final report,” CMHC stated in an email to Home BUILDER.
“Our government has clearly stated several times that we will not be introducing a tax on the equity of primary residences in Canada. Any suggestion otherwise is false,” said CMHC media manager Leonard Catling in a statement released by the Ministry of Housing.
The Canadian Taxpayers Foundation (CTF) has come out firing against the proposal.
“If there’s a housing problem, then we need to build more homes, so governments should be reducing taxes and red tape on homes and the material that is needed to build more homes. We are not going to tax our way to more homes. You build more homes with hammers, not tax hikes,” CTF stated.