Quote:
Originally Posted by Carl Johnson
If I buy a stock and make a profit I have to pay tax on 50% of my gain (excluding RRSP TFSA here). If I work a regular job I have to pay taxes according to my marginal tax rate not to mention all other other deductions like CPP and EI government takes. So why is it this guy who have lived at this residence for less than 5 years can potentially net over $1,000,000+ not have pay a dime on this profit? The current system of principal residence exemption needs to be abolished once for all. This should guy be paying taxes on at least half of his capital gain just like if I a buy a stock since he never had the intention of living their permanently.
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like kr4l said, it is because he took a risk. there is little to stop you from buying a place, living there, pay someone to renovate / reconstruct, etc. and take potential gains tax free.
the problem is, if he is $2M into a project, he could sell for $3M or equally the market could crash and he's sitting on $1M, losing $1M. when you go to work everyday, there's no chance of it costing you money (well, opportunity cost, perhaps).
but beyond that, you're point is bang on, the idea of the capital gains exemption is that houses are meant to be homes, not investments. he's clearly skirting the spirit of this tax break, and one could definitely argue that something should be done about it.
i do not know the specifics of that tax law, but have a rough knowledge that there's a limit to how many homes in a certain time period you can claim as a principal residence.