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Originally Posted by westopher
Capital gains taxes will just force people to hold or ask outrageous selling prices which may impact supply or push the market higher.
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Quote:
Originally Posted by Great68
Nah, I have no problem with people flipping their primary residence. They're taking the risk that they'll mis-judge or mis-time and take a bath on it.
Or they're reno-flippers, which I believe we need. They're still taking a risk on the work, and ultimately providing a needed service in upgrading homes.
I have several on my street that are in the middle of this right now, and the end result is that adds to my street looking better.
If you want to tax capital gains on primary residences, then I should be able to write off my mortgage interest as an expense. like they do in the USA
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Quote:
Originally Posted by EvoFire
Doesn't work like that. You start taxing the gains harder, people would just not sell or sell for even higher prices. Basic economics. With that it also means people that need to upgrade may not be able to afford to as now they need to pay for the gap of the tax between their current sale vs the new place they want to buy.
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Capital gains is a reduced tax rate on gains. The keyword is gains. If the gain is only $1, you pay 25 cents. If the gain is 0, then you pay 0. If you sell your house for less than what you bought it for, then that should be written off against your other investment income (if any).
Now, what are the 3 key reasons that people sell their principle homes?
a) Upsize
b) Downsize (including being forced due to financial reasons)
c) Move somewhere else
In what world will someone hold out and not sell due to a capital gains tax that will work out to a similar normal income tax rate if they are in the a, b, or c group?
And now, the last point, regarding the gap in upsizing. Yes, capital gains will erode and give you less buying power for your next home. But guess what, since this will apply to EVERYBODY, then there will be less stupid money to buy the next house. You are all assuming that prices will stay the same or keep rising, but fail to realize that this measure should bring prices down for everybody, including those who will be buying their first homes. It's basic economics, as you said. Less money available to be spent, housing prices go down.
This reminds me of the argument for higher minimum wages. "This city is to expensive to live in, let's raise minimum wage by 40%." Well, if you raise minimum wage, then everything goes up since labour will go up and so will operating costs for almost all businesses. Then it just makes everything more expensive again will now affect everyone and you are in a endless cycle of inflation and fixes to it causing more inflation.
To me the solution to the "affordability crisis" isn't by giving everybody more money. It's the opposite.