Canada Mortgage and Housing Corp. (CMHC) has moved to dispel fears that the federal government is hatching a plan to place an unprecedented tax on the equity of private homes, but the denial has failed to ease concerns.
Canadian homeowners currently don’t pay tax when they sell their primary residence, making it unique in the real estate industry.
A July 17 report from the online political newsletter Blacklock’s Reporter stated that CMHC had awarded a $250,000 grant to the University of British Columbia’s (UBC) School of Population and Public Health to research the first-ever home equity tax. The money was provided under a UBC project called Generation Squeeze, headed by Prof. Paul Kershaw.
“The objective is to identify solutions that could level the playing field between renters and owners,” CMHC spokeswoman Audrey-Anne Coulombe was quoted as saying.
Generation Squeeze complained “many Canadians bank on profits from home ownership to secure their financial future and gain wealth. We need to make it so that no Canadian relies on gains in housing wealth to feel secure, and we need to rethink policies that, by encouraging the financialization of housing, push the cost to buy or rent a home even further out of reach.”
In a 2019 report, UBC researchers called homeowners “lottery winners” with an unfair tax advantage.
Speaking on CKNW radio July 18, Vancouver real estate investor and consultant Ozzie Jurock said he became worried about a home equity tax last year when the federal income tax guide asked, for the first time, if the taxpayer had sold a home.
“I said at the time that a tax on home equity was coming,” Jurock said.
By this time, CMHC was in full denial mode.
In an email, a CMHC media representative said that claims it invested $250,000 in federal home equity tax research are “not accurate.” The email added that the UBC grant was simply part of a study exploring housing affordability. A follow-up twitter from CMHC CEO Evan Siddall stated: "We are co-funding a Solution Lab on housing wealth and inequality. We do not control the agenda nor the research base, which is a minor component of the protocol."
But does CMHC doth protest too much?
Jurock pointed to the national foreign-homebuyer tax, B.C.’s speculation tax and empty home taxes as evidence of a steady escalation in new taxes on buyers and sellers of private homes
Vancouver real estate appraiser Paul Sullivan is equally unconvinced.
“CMHC’s denials appear disingenuous,” Sulllivan said, given Generation Squeeze’s “far-left” leanings and record of encouraging higher taxes on home ownership.
“This new tax would be devastating for a Canadian middle class, dependent on a home nest egg to secure their financial future,” Sullivan said.
Is a tax on home equity coming? With the federal debt flirting with $1 trillion for the first time, it is hard to imagine that such a windfall tax measure is truly off the table.
Frank O'Brien,editor,Western Investor
