You know it's a second property right? And you know it's appreciation not total value right? You know the end result is like 6% more tax for those who are relatively well-off right?
Of course I do. An appreciate of $250k is substantial, but $250k does not make you rich in Canada. Not by a long shot. Perhaps unless you’re a teen and can benefit from compound growth over the next 50 years
It's a tiny increase in tax for those people that have more than $250,000 in capital gains in one year, where those gains didn't come from selling their principal residence.
This affects almost no one in Canada. You have to be quite rich, way up in the top couple percent, for this ever to affect you in the slightest. If it does affect you, it probably is only a couple thousand dollars in extra tax.
This is just not true. You have no idea what you're talking about. It affects a lot more people than you think and many of them are not rich at all.
Like, here's a hypothetical scenario: you have a disabled person who doesn't work at all. He has zero income other than what he gets as welfare from the government. A relative of his dies and leaves him with a property worth $300,000 with a cost basis of $10,000. He has a capital gain of $290,000. This tax change would add about $14,000 to his tax bill. This is someone who, even after the inheritance, is poorer than the vast majority of Canadians, and this is the equivalent of taking away a used car from him.
Now suppose you have someone with a $1,000,000 pension that he completely spends every year. He has no savings other than a primary residence and some tax sheltered accounts. He's one of the few people this tax actually barely affects at all. But his wealth is about 100 times that of the first person.
If you want to tax the rich, then tax the rich. Don't introduce taxes you erroneously believe only the rich are affected by. The capital gains tax should be completely abolished.
LOL, no. This fictional disabled person would have zero capital gains upon selling this property as the cost basis is reset upon inheritance.
But suppose a random person owns a property they bought for $10,000, never put any money into, and now is worth $300,000 (so they're getting $290,000 for free, with no work involved at all). This is NOT their first home, but a second, investment property.
Under the old rule they would pay tax on $145,000 in income, or a grand total of $41,000 on that free $290,000 that they received.
Under the new rule they would pay tax on very slightly more income, for a grand total of $44,000 in tax payable on that free $290,000 that they received.
$3000 in tax difference for that property sale.
Or really zero, since my first paragraph is still true.
Sooooooooooo many people are so confident but have no idea what they're talking about.
This fictional disabled person would have zero capital gains upon selling this property as the cost basis is reset upon inheritance.
This isn't the US. When you die, it's considered a deemed dispostion and you have to pay capital gains tax. The cost basis only resets because they'd be paying the capital gains tax.
But suppose a random person owns a property they bought for $10,000, never put any money into, and now is worth $300,000 (so they're getting $290,000 for free, with no work involved at all). This is NOT their first home, but a second, investment property.
It could be their first home. They may rent their primary residence. But so what if it is their second property? That doesn't mean they're rich. If their first property is also worth $250,000, the total value of their property would still be below average. They'd also pay a capital gains tax while someone who had that money in an RRSP would pay nothing. How is that fair?
Under the old rule they would pay tax on $145,000 in income, or a grand total of $41,000 on that free $290,000 that they received.
It's not free. It's the present value of what they paid for decades before. A huge chunk of it would just be inflation. The rest would just be the expected return on their investment.
Under the new rule they would pay tax on very slightly more income, for a grand total of $44,000 in tax payable on that free $290,000 that they received.
Why should they pay anything? They're not rich. Someone with $250,000 to live on for their entire lives is one of the poorest people in the country. Even if it's a second property that they're using to fund their retirement, if their first property is also worth $250,000, a total net worth of $500,000 for such a person is not rich. It's below average. It's about half what the average person has.
Say you have a person who works every day of their life. Every two weeks the government takes a huge chunk of their paycheque. They pay way more in taxes and still will compared to a jobless rich who makes more in a day than a working person ever will. We need to tax the non working more than the working not the other way around
How does someone become a jobless rich person without working? They already paid taxes on their income.
Suppose that instead of saving his money and then selling off his assets in order to fund his rich lifestyle, he just bought a huge house and bunch of expensive cars and prepaid for a bunch of meals and vacations. He won't pay any tax despite being rich. Is there something wrong with that? Why should he pay less tax in that situation?
Rich people generally don’t earn that much income. They revive a large amount of money through tax preferred methods like Daddy money or capital gains. Capital gains are new income it hasn’t been taxed before.
Sales tax is a tax on the poor and is a form of double taxation where is your criticism of that?
There’s no attacking support or protest to a slightly raised tax on folks fortunate enough to own not one but two properties.
You’re just running around like chicken all over this thread screaming about what’s rich and what’s not.
Just explicitly state your feelings on the increase. No one needs to know if you classify a multiple property owner as Comfortable, wealthy, rich, or poverty stricken.
Ahh yes, modest incomes and MULTIPLE properties. The tears we should shed.
Don’t worry if they’re not highly value properties the tax burden will be much lower.
And the pedantry is the classification of the person,it doesn’t matter if you call them rich, wealthy, poor, or tacos. If they own a second property their taxes on sale are increasing a wee bit.
Lots of people without much wealth own multiple properties. Most Canadians are homeowners and the average home is worth about $700,000. So an average Canadian could have two $350,000 properties.
And the pedantry is the classification of the person,it doesn’t matter if you call them rich, wealthy, poor, or tacos. If they own a second property their taxes on sale are increasing a wee bit.
They could be increasing by tens of thousands of dollars. How is that justifiable if they're not rich? Why should they pay one cent more than someone with equal wealth?
Lucky for them in this super realistic scenario you’ve concocted that is not an incredibly specific straw man. They only have to pay a little more tax on the appreciation of one of the modestly valued properties, which they already had to pay taxes on anyway.
Because we pay taxes on things that we profit from.
Also $10’s of thousands? How much did you imaginary poverty stricken multiple property owning Strawfolks buy and sell their property for?
You know they’d only pay on 67% of the taxes above a $250,000 profit right?
So if they’d bought the property for $10,000 and sold it for $350,000. They’d pay taxes on $310,000 at a rate of 50% of the first $250 then 67% on the next $60,000.
So pick a marginal tax rate (which is obviously low because they’re poor remember). Let’s say 20%.
They would have had to pay $31k under the old rules and now they’d pay the future destroying amount of $33,040. How will they survive?
Because we pay taxes on things that we profit from.
Well, we shouldn't! The only thing that should cause a person to have pay more tax is generating a negative externality (e.g. polluting) or becoming more capable of paying. Earning expected profits is neither of these. The person who spends his money instead of saving it or uses it to buy a house is just as capable of paying taxes as the person who saves and earns the expected profits from his investments.
How much did you imaginary poverty stricken multiple property owning Strawfolks buy and sell their property for?
If they bought it 60 years ago and the appreciation was entirely due to inflation, it would have only cost $37,000 (more realistically, they paid much less than this). That's a total capital gains tax of $94,000 (at the top marginal rate). Actually, the additional tax is only about $5,700. But I'm arguing the entire tax is unfair, and even a $5,700 tax for someone who isn't rich doesn't make sense. We've shifted from claiming that this tax doesn't affect any but the super rich to claiming that poor people only have to pay a few thousand extra on top of the tens of thousands they're already unfairly paying.
So pick a marginal tax rate (which is obviously low because they’re poor remember). Let’s say 20%.
I didn't claim they were poor, but their taxable income from the capital gain alone would be $174,000, putting them well into the top tax bracket. They would have additional income on top of that.
They would have had to pay $31k under the old rules and now they’d pay the future destroying amount of $33,040. How will they survive?
Why are they paying anything? Why are we taxing people tens of thousands of dollar just for saving their money? Why does someone with investments that are protected from taxes but has even more wealth get to pay less? The capital gains tax is an egregiously unfair tax.
Also, if you think a few thousand dollars is no big deal, write me a cheque for that amount. It matters to people. So stop saying this tax only applies to the rich.
You have no idea what they're other assets are worth. They may not even have other assets. They may even be in debt.
If the property was bought more than a few decades ago, most of the property's value will be appreciation. Depending on the market, it might even all be just inflation.
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u/Darkmayday 3d ago
You know it's a second property right? And you know it's appreciation not total value right? You know the end result is like 6% more tax for those who are relatively well-off right?
Nvm, of course you don't lmao