The measure could discourage the growing use of homes as investment assets
A surtax on properties valued at more than $1 million could help moderate the currently inflamed pace of home-price growth in Canada, according to affordability advocacy group Generation Squeeze.
The levy would be an annual (and deferrable) progressive surtax on these high-cost homes, which would “reduce the tax shelter on principal residences that incentivizes Canadians to see rising home prices as a source of wealth accumulation,” Generation Squeeze said in a new report.
Implementing such a measure would hopefully stem the tide of current and prospective owners utilizing their homes as investment assets instead of places to live in, the group said.
“While high and rising home values have a negative impact on affordability for renters and aspiring owners, the same high and rising home values benefit others by increasing their financial security and growing their wealth,” Generation Squeeze said. “When everyday Canadians normalize such benefits, count on them, or pursue them, we reinforce feedback loops in the housing system which further fuel unaffordability and wealth inequalities.”
Read more: What will happen to the Canadian housing market in 2022?
The group also recommended aligning the mandates of the Canada Infrastructure Bank and the CMHC “to incentivize lending to scale up green co-op and affordable purpose-built rental supply.”
Concurrent with these measures, Generation Squeeze recommended that Statistics Canada should review “the ‘owned accommodation’ component of its Consumer Price Index (CPI) Calculation, and report annually about the influence of monetary policy on the growing gap between home prices and earnings.”
