Posthaste: Capital gains in the crosshairs in housing affordability report
The corporate quest for profit via real estate holdings is exacerbating Canada’s rental affordability crisis, according to a report from Canadians for Tax Fairness.
The report, released earlier this week, blamed capital gains and residential real estate investment trust tax policies for “financializing” housing — “increasing ownership by financial actors” — with the organization suggesting that Ottawa’s much-criticized change to the capital gains inclusion rate is needed to shift the tide.
“The increasing financialization of housing has contributed to the affordability crisis, and is exacerbated by preferential tax treatment for capital gains and real estate investment trusts (REITs),” Silas Xuereb, a research and policy analyst and author of the study, said in the report.
“The changes to the capital gains inclusion rate proposed by the federal government are critical to counteract the trend by bringing tax rates on capital gains closer to tax rates on other streams of income. Without it, billions in capital gains flow into corporate and investor bank accounts tax free.”
Canada is contending with many housing issues, not the least of which is a rental affordability crisis. During 2023, Xuereb said rents rose eight per cent while wages rose five per cent. More recently, rent increased 8.9 per cent year over year in August even though headline inflation slowed to two per cent, according to the latest consumer price index report from Statistics Canada.
Canadians for Tax Fairness estimates the finance, insurance and real estate (FIRE) sectors have supercharged their real corporate capital gains by 700 per cent via the sale of financial and real estate assets since 2002.
“The rise of capital gains in the FIRE sector reflects
Read more on financialpost.com
