Singh to target ‘big-money’ house-flippers by hiking taxable amount of capital gains

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This article was published 31/08/2021 (1519 days ago), so information in it may no longer be current.

COQUITLAM, B.C. – The NDP leader promised Tuesday to crack down on “big-money” house-flippers by increasing the taxable amount of capital gains profits from 50 to 75 per cent.

Jagmeet Singh made the announcement in Metro Vancouver, an area where the New Democrats hope to attract voters frustrated with housing prices that have skyrocketed out of reach of many middle-class families.

“One of the big problems that we’re seeing is that very wealthy investors are using the housing market like a stock market,” he said.

“And we want to tackle that. We want to get big money out of housing.”

He said his plan would target wealthy speculators who buy affordable homes, renovate them quickly and resell them for profit, while using what he describes as the capital-gains loophole to not pay their “fair share” of taxes.

The Liberals cut the capital-gains inclusion rate to 50 per cent from 75 per cent in 2000. Leader Justin Trudeau has refused to close the loophole even though it has a billion-dollar price tag and 88 per cent of it goes to the richest one per cent of Canadians, Singh said.

A capital-gains tax is applied on the sale of an investment asset, like a stock share or real estate property, but does not apply to a primary residence and Singh said he has no plans to change that.

The Liberals proposed last week an anti-flipping tax on residential properties, requiring that such homes be held for at least 12 months.

Singh criticized the proposal, saying it doesn’t address the problem but simply “pushes it down the road,” adding, “That is not going to make a difference.”

He said money laundering has also been driving up housing costs in British Columbia, an issue that the provincial government convened an inquiry to examine.

“We can also tackle that,” Singh said.

“And while the B.C. NDP has done a lot to tackle it provincially, it’s really something that needs federal partnership. The federal government is in the best position to tackle money laundering, and to tackle the illegal activities that are driving up the cost of housing.”

Singh stopped by his Burnaby South campaign office in the afternoon to meet and greet his staff and supporters in a high-energy, party-like atmosphere.

The NDP leader elbow-bumped, laughed and cheered his way through the crowd. Several photos and selfies were snapped with his supporters.

Cars honked, people clapped, supporters chanted, and he was given a bottle of homemade blackberry jam and a children’s book for his soon-to-arrive baby.

Earlier in the day, Singh also accused foreign buyers of pushing up real estate costs, saying his party’s goal is to unlock the ability of Canadians to buy their own home.

“To do that we need to tackle the housing crisis, we need to build more homes that are in people’s budgets, and that’s really our goal,” saying there needs to be a “holistic solution.”

His government would build 1.7 million homes, he said, calling it a “bold step forward.”

“We’re proposing a suite of solutions to address all the problems,” Singh said. “It’s a plan that deals with all the concerns that people have.”

Andy Yan, director of the City Program at Simon Fraser University, noted that the devil is in the details when it comes to such promises.

The viability of a capital-gains tax depends on whether it is incremental or a lump sum, who it involves and how it is rolled out, he said in an interview.

“Is that 75 per cent immediate or happening after the first $50,000? A Canadian tax bracket is incremental as opposed to flat,” Yan said, suggesting this proposal could follow a similar scale.

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Capital investments improve businesses and properties and those investors should be able to reap a level of return, he said, so it’s important to keep capital gains taxes in check.

It becomes an issue, however, when residential real estate is used as a stock certificate, he said.

Adding to the complexity of the issue is the fact that almost one out of five homeowners in Vancouver and Toronto have more than one property, he said. Many of these properties end up becoming income generators as they are rented out as “phantom hotels” via Airbnb instead of full-time rentals, which is driving down vacancies and increasing rents, he noted.

“That’s an example of a very specific capital gain area that hasn’t been addressed by any candidate.”

This report by The Canadian Press was first published Aug. 31, 2021.