We are expecting an election this fall. ☹

Our economy isn’t even fully open yet and we’re already expecting an election in September. 

In 2019, I attended an event featuring Michelle Obama in Hamilton. 

She was asked if she would consider running for presidency. 

She said that being a president was about compromises. 

When you run for your campaign, you might intend to deliver on 10 promises. 

When you get elected, you might have to be prepared to get nothing done. 

It sucks when you can’t deliver on your promises when you get elected.

After witnessing these struggles firsthand, Michelle Obama doesn’t want to put herself into these constant struggles.

I don’t have a favourite political party, but the election platform that the Conservative Party is very interesting, especially for small business owner and real estate investor.  Here’re a few highlighted that you might not be aware of.

Capital gain deferral

One of the ways to increase housing supply by implement a plan to build 1 million homes in the next 3 years is to incent Canadian investors in rental housing by allowing investors to defer capital gains tax when selling a rental property and reinvesting in rental housing, something that is currently excluded.

Yep, that sounded like something very similar to the US 1031 exchange which allows owner of US real estate defer capital gain tax owed on the sale of the property. 

Seems like Conservative Party is proposing this to help boost the rental housing supply in the private section.

Restrict foreign investors purchasing properties in Canada

Can’t tell you how many ads on Canadian condo investments from a Hong Kong news website. 

I’m not the only one that notice it.

One of the reasons why our Canadian housing market is unaffordable is a result of foreign investments.

Conservative Party intends to ban foreign investors not living in or moving to Canada from buying homes locally for a 2 year period. 

Instead, they intend to encourage foreign investments to build purpose built rental housing.  

Expand mortgage accessibility

It’s interesting to see what the Conservative Party intends to do to allow more Canadians to access mortgages.

They are proposing the following:

  1. Encourage a 7 to 10 year mortgages to first time home buyers, removing the need for mortgage stress tests
  2. Remove the requirement of mortgage stress tests when a homeowner renews a mortgage with another lender
  3. Increase the limit on mortgage insurance eligibility to allow Canadians to buy in high-priced real estate market with less than 20% down
  4. Fix the mortgage stress test to stop discriminating against small business owners, contractors and other non-permanent employees

These are all music to my ears if they can all be implemented.  😊

Primary residence capital gain exemption

This is huge. 

I mean, the rumor on the street is that the Federal government is intending to tax the capital gains on the sale of principal residence.  This has been the rumours for the last few years.

Every year around Federal budget time, news reporters often repeat this exact same risk year in and year out.

The good news is that the Conservative Party is reassuring that they would not impose a primary residence capital gain tax in the future. 

Capital gain inclusion rate

Nothing was mentioned in the Conservative Party’s election platform relating to the capital gain inclusion rate.  I mean, after all, they’re proposing to allow capital gain deferral from sale of one rental to the purchase of another rental.

However, NDP did mention that they intended to increase the capital gain inclusion rate and increase the highest marginal tax rates in Canada. ☹

Price tags?

All these policies sound great to all real estate investors and small business owners.

Like I mentioned earlier, implementing government policies is about compromise and sacrifice. 

Implementing these policies will boost increase in rental supplies, but they also come with a price tag. 

Unfortunately, no information is available at this point on how much these policies will cost.  Will definitely keep an eye out for the price tags.

Until next time, happy Canadian Real Estate Investing.

Cherry Chan, CPA, CA

Your Real Estate Accountant

1 reply
  1. Anne Bossy
    Anne Bossy says:

    Thank-you for this valuable information!

    Reply

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