Recently there has been lots of speculation on how the Canadian Government will cool the red-hot Real Estate markets in Toronto and Vancouver. Ideas have been thrown around about introducing the foreign buyer tax in Toronto, as was done in Vancouver. Additionally, there has been talk of increasing the capital gains tax in order to target speculators and home flippers.
Leading up to the last federal budget, there was speculation that Canadians should brace for some changes in capital gains tax rules. That didn’t happen! The sale of your principal residence for a gain is still a tax freebie. If you are selling a property other than your principal residence, then you’ll pay tax on 50% of any gain you realize.
That rate first went into effect in 1972. The inclusion rate was increased to 66.6% in 1988 and then to 75% in 1990. But it was ratcheted back down in 2000 and landed once again at the 50% rate where it has remained to today. You are now required to report the sale of your principal residence on your tax return. While still tax exempt, you may be asked to prove that it was your principal residence. If the feds do once again increase the inclusion rate, we can expect the government to provide ample advance warning to allow people to adjust their financial situations. So basically no real changes to capital gains tax, but keep good records!
Check out the Federal Government’s Capital Gains Tax policy here:
Overview
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