Ontario finance minister wants Ottawa to help curb real estate speculation
Charles Sousa is urging the federal government to help cool home prices in Toronto’s overheated real estate market.

TheStar.com
March 20, 2017
Robert Benzie

Queen’s Park wants Ottawa to help cool home prices in overheated real estate markets such as Toronto.

Ontario Finance Minister Charles Sousa is urging federal Finance Minister Bill Morneau to take steps in his budget Wednesday to curb speculation contributing to the soaring cost of homes.

“Uncertainty in the housing market has been partially driven by speculation,” Sousa told the house on Monday after sending an open letter to Morneau imploring him to act.

“I’ve sent a letter to the federal minister of finance to request that the federal government consider increasing the capital gains inclusion rate for non-principal residences,” the provincial treasurer said.

“Under the current rule, when you sell a home that is not your principal residence for a profit, only 50 per cent of the capital gain is included in taxable income,” he said.

“This change will be an important step toward keeping our country’s housing market stable and curbing price acceleration.”

Sousa’s comments come as he is preparing an Ontario budget expected next month.

He was coy about what additional measures the provincial government will take to ensure house prices are more affordable.

“We are looking at a suite of options that may be available to us,” said Sousa, who noted that he met with British Columbia’s Finance Minister Mike de Jong on Monday to discuss that province’s tax on foreign buyers in Vancouver.

But the Ontario minister stressed he was concerned about “the unintended consequences of any decisions we make,” and indicated that domestic speculators are having a greater impact on housing prices than wealthy investors from abroad.

“Just today, TD Economics released a special report on the housing market, arguing that the heightened uncertainty in the market can be largely attributed to speculation,” he said.

The bank noted prices are expected to rise between 20 per cent and 25 per cent this year, and “at roughly 3 per cent to 5 per cent in 2018.”

“Uncertainty is running higher than usual due to the risk of more buyer speculative activity,” the TD study said.

“Our analysis suggests speculative demand forces may have become more far-reaching within Toronto’s housing market.”

In Ottawa, an aide to Morneau said the federal government is “committed to working closely with provinces and municipalities to tackle housing affordability issues.”

“We believe all Canadians deserve a real and fair chance at success, and this includes having access to housing that meets their needs and that they can afford,” press secretary Annie Donolo said in an email.

“We know that, for many middle-class Canadians, their home is the most important investment they will make in their lifetime. As such, it is critical to their financial well-being that this investment be protected, and for people to be making investments they can afford,” said Donolo.

That’s why Ottawa doubled the amount required as a down payment on homes costing more than $500,000. It now stands at 10 per cent.

“We’re improving tax fairness by ensuring that the principal residence exemption is available only in appropriate cases,” she said.