How The Capital Gains Tax Hike Could Affect Real Estate Development

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Howard is based in Burnaby and covers real estate, housing policy, and the development industry. Signal: HowardChai.24

On Monday, Deputy Prime Minister and Minister of Finance Chrystia Freeland introduced the legislation that would bring forth the changes to how capital gains are taxed, a change that has been highly controversial since it was first revealed in April.

Businesses and corporations are particularly upset about the tax hike because it applies to all capital gains they realize, not just a portion of it, which amount to a much more significant increase., and other realms, but what about the real estate and development industry? To find out, STOREYS spoke to some leaders in the industry.Jon Stovell. "You're very often buying from long-term owners.

What this could result in, Stovell warns, is money flowing elsewhere, which he notes can already be seen with Vancouver-based developers working in the US. "In Vancouver and in Toronto, 30% to 40%+ of our overall rental stock is privately-held condos," he says. "When a condo building completes with 300 units, approximately a third of those units are going to hit the rental market right away. So, if you take some investors out of the market, you get less presales, you get less projects starting, and you're gonna get less housing supply overall.

 

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Capital gains tax changes will help build more housing: FreelandSpeaking to media on Tuesday in Ottawa, Finance Minister Chrystia Freeland explained that Monday's capital gains tax changes are designed to generate more government income to help build more housing for younger Canadians. She added the additional taxes will ensure younger Canadians don't inherit future federal debt through the initiative.
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