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?

Happy listening!

Moodys Tax Law is only about tax. It is not an add-on service, it is our singular focus. Our Canadian and US lawyers and Chartered Accountants work together to develop effective tax strategies that get results, for individuals and corporate clients with interests in Canada, the US or both. Our strengths lie in Canadian and US cross-border tax advisory services, estateplanning, and tax litigation/dispute resolution. We identify areas of risk and opportunity, and create plans that yield the right balance of protection, optimization and compliance for each of our clients' special circumstances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.