Ottawa has announced new rules aimed at limiting foreign money into Canadian real estate and ensuring that Canadians take on mortgages they can afford.
“Overall, I believe the housing market is sound, but as minister of finance, I want to make sure we are proactive in assessing and addressing the factors that could lead to excess risk,” Finance Minister Bill Morneau said in making the announcement Monday in Toronto.
They include a move to close a loophole in the tax laws that allows non-residents to buy homes in Canada, and then get a tax exemption to avoid paying capital gains when they sell the home by claiming it as a principal residence.
Starting now, “an individual who was not a resident in Canada in the year the individual acquired a residence will not be able to claim the exemption for that year,” Morneau said.
Canadians who were legitimate residents at both the time of purchase and time of sale will still be able to take advantage of the principal residence tax exemption, Ottawa says.