Why Primary Residence Taxation Doesn’t Help Canada

    0
    14


    Some homeowners who need to move might choose to rent their current home and become tenants themselves, as they could benefit from the fact that homeowners renting out their homes can deduct mortgage interest and property taxes from their income.

    “In both cases, capital gains tax would then have a negative impact on supply (new listings) and offset gains on the demand side,” they said.

    The U.S. model – taxing primary residences, but also deducting mortgage interest payments and property taxes from taxable income – could be a palatable option, she said, but it would mitigate or neutralize the benefit of the primary residence tax. The net impact of supply and demand would be jumbled as one tax preference is swapped for another, and the tax cost of housing deductions would partially or fully offset the additional revenue from the new tax.

    A high exemption so that few people are affected could be another way to gloss over capital gains tax on primary residences. Aside from adding one more provision to an already complicated tax system, such an exemption would focus demand on the lower end of the property market, meaning buyers in this segment would continue to face affordability challenges.

    “[Most homeowners] I haven’t kept an eye on home improvement costs over the years because they haven’t had to, ”the two continued.

    LEAVE A REPLY

    Please enter your comment!
    Please enter your name here