Practice National Taxation
Changes to the Canadian principal residence exemption – part two
Kim G C Moody provides an update to the principal residence exemption conversation
Kim G C Moody says the time for change might be ripe for changes to the Canadian principal residence exemption.
CALGARY – Our firm's earlier blog and podcast on possible changes to the Canadian principal residence exemption generated a lot of feedback and discussion. Such feedback and discussion was not surprising given how foundational and important the exemption has been in Canadian tax policy. The feedback generated a number of questions and comments that Kenneth Keung and I thought would be worth a Part Two discussion.
Accordingly, in Part Two of the Principal Residence Exemption episode, we discuss:
- If changes were made to the principal residence exemption, would/should such changes be made prospectively or apply with retroactive effect?
- If changes were made, would Canadians need to properly value their principal residences on the date that such changes were made effective? Are there examples of this historically?
- If changes were made, should such changes include making mortgage interest tax deductible?
- Should Canadians be selling their principal residences to lock-in exemption claims under current law? If not, should they consider other proactive planning? What type of "planning" should Canadians NOT do?
- There has been a lot of discussion lately about Canada possibly introducing a "home equity tax." Some authors about such a topic seem to conflate possible changes to the Canadian principal residence exemption as a home equity tax. That is simply not true. What would a true home equity tax possibly look like? Would a true home equity tax be a good idea to introduce into Canadian tax law?
- Should used residential housing property be exempt from GST/HST?
Kim G C Moody FCPA, FCA, TEP, is the chief executive officer and director of Canadian tax advisory at Moodys Tax Law LLP. Image by Gerd Altmann from Pixabay.