As a homeowner, your property is likely one of your most significant investments. However, recent discussions around potential housing policy changes by our federal government, under the banner of "Fair Housing," could alter the landscape of the Canadian housing market in ways that directly impact you. These changes are being driven by a push to create a more equitable housing environment, particularly for younger Canadians and those trying to enter the market. While the "Fair Housing" initiative aims to make homeownership more accessible, it could have significant consequences for those who are already in the market.
Here’s what you need to know about the potential "Fair Housing" changes:
1. Stalling Home Prices
One of the most significant potential changes under the "Fair Housing" initiative is the push to stall home prices. The idea here is that by keeping home prices from rising, wages will have a chance to catch up, making housing more affordable for future buyers. But what does this mean for current homeowners? Many of us purchased our homes with the expectation that property values would continue to increase over time, contributing to our long-term financial security and wealth building. If home prices stall as part of "Fair Housing" policies, this could impact the equity you’ve built and your overall financial strategy, especially if you were counting on your home’s appreciation as part of your retirement planning or other long-term goals.
2. Surtax on Homes Valued Over $1,000,000
Another proposed change within the "Fair Housing" framework is the introduction of a surtax on homes valued over $1,000,000. The government is considering this measure as a way to address housing inequity by targeting what they consider "high-value" properties. However, in markets like the Greater Toronto Area (GTA), where the average home price is often above $1,000,000, this surtax could affect a significant portion of homeowners. If your property falls into this category, the "Fair Housing" surtax could mean additional costs that may impact your overall financial situation.
P.M. Justin Trudeau speaks openly of Operation Squeeze on Stalling Home Prices, Principal Residence Capital Gains Tax, and other "Fair Housing" policies.
3. Maintaining Higher Interest Rates
There’s also talk within the "Fair Housing" discussions about keeping interest rates higher for longer. This potential policy shift is tied to the idea of revising how inflation is measured, which currently doesn’t fully account for the rapid rise in housing costs. For homeowners, particularly those with mortgages, higher interest rates mean higher monthly payments when it comes time to renew. This could strain your budget and make it more difficult to manage other financial commitments, making "Fair Housing" a double-edged sword for current homeowners.
4. Capital Gains Tax on Principal Residences
Perhaps the most concerning of the potential "Fair Housing" changes is the possibility of introducing a capital gains tax on principal residences. While this has not yet been officially proposed, there’s growing discussion around the idea as part of the "Fair Housing" agenda. Such a tax would be a significant departure from current policy, where gains on the sale of a principal residence are exempt from taxation. If introduced, this could drastically alter the financial outlook for homeowners looking to downsize, relocate, or tap into their home’s equity in retirement.
What Should Homeowners Do?
If these potential "Fair Housing" changes are causing you concern, you’re not alone. The prospect of stalling home prices, additional taxes, and higher borrowing costs can seem daunting, especially if your home is a key part of your financial plan. At this stage, the most effective step you can take is to make your voice heard.
- Contact Your MP: These "Fair Housing" policies are still under discussion, and public opinion can make a difference. Reach out to your Member of Parliament (MP) to express your concerns about how these "Fair Housing" changes could impact you and your community. By making your voice heard, you can contribute to the conversation and potentially influence the direction of these policies.
