The key new risk is higher taxes on capital gains on the sale of rental property and other investments. In their election platform, the NDP promised to raise the capital gains inclusion rate (CGIR) from 50% to 75%.
Such a change would raise corporate taxes on capital gains by 50%. The change would increase the income tax individuals pay on capital gains by 50% or more, depending on the taxpayer’s other income. See the table below.
Unfortunately, the idea of raising capital gains taxes resonates with many progressive voters. To them, it really is a promise, whereas to rental owners, it is a threat.
CFAA provided input to the Liberal government when an increase to the capital gains tax was reported to be under consideration two years ago. We did that quickly due to timing issues. Now, with more warning, CFAA can consult members more about messaging and alternatives (such as inflation adjustments, or varying rates depending on the hold period). With adequate resources, CFAA can also commission helpful academic research to support our positions, and CFAA can increase proactive meetings about the issue with officials and key politicians.
To do that work well, CFAA needs more resources. Because CFAA member associations have their own battles to fight at the provinces and cities, more resources can best come from rental providers stepping up to join CFAA as direct members. The annual direct membership dues are 50 cents per unit, plus $100. That is a very small amount compared to the higher taxes that are a real risk.
For more information about the CFAA direct landlord membership program for 2020, e-mail email@example.com.
Another key area which may well see changes due to the NDP’s influence is housing programs. The Liberal government is on its way to supporting the building of 150,000 rental units with an affordability component over the next 10 years. The NDP wants to build 500,000. With the provinces, the Liberals are also rolling out a Canada Housing Benefit to provide direct financial assistance to 300,000 low income tenant households. The NDP wants to make that 500,000 households.
The balance of supply and demand in each rental market has an enormous influence on market rents. With housing policy being reviewed, CFAA has an opportunity to promote programs which serve the public interest, tenants and landlords, and to discourage programs which hurt landlords. Help us to help you! More investment in CFAA would repay its cost many times over.
For more information about the CFAA direct landlord membership program for 2020, e-mail firstname.lastname@example.org TODAY.