Ontario urging Ottawa to change tax rules in bid to curb real estate speculation
Ontario Finance Minister Charles Sousa speaks to reporters at Queen's Park in Toronto on Tuesday, April 15, 2014. (Darren Calabrese / THE CANADIAN PRESS)
The Canadian Press
Published Monday, March 20, 2017 2:33PM EDT
TORONTO -- Ontario Finance Minister Charles Sousa is urging Ottawa to address speculative investing in the country's housing markets by changing how such profits are taxed.
Currently, capital gains tax is charged on 50 per cent of the profits on the sale of a home, unless the property qualifies for the principle residence exemption.
In a letter to federal Finance Minister Bill Morneau on Friday, Sousa says that boosting the taxable amount above 50 per cent could reduce the incentive for people to purchase homes on speculation. Morneau is set to release his latest budget on Wednesday.
Speculative investing in the real estate market -- buying a home in the hope of turning a profit rather than to live in -- is believed to be one of the culprits behind soaring house prices in certain markets including Toronto and Vancouver and their surrounding areas.
Sousa says curbing speculative real estate purchases could help address dwindling housing affordability so that first-time buyers are able to get into the market.
Such a measure could also generate tax revenue to put towards other housing affordability initiatives, he adds.
"My primary focus is to address the concerns of middle class Canadians who are worried about buying their first home," the letter reads.
"Additionally, it is important that the housing market remains stable, meaning that borrowers and lenders are resilient and able to withstand economic shocks."