the rennie landscape Fall 2024 | Victoria

policy

CAPITALIZING ON INVESTORS

In April, the federal government announced their intention to amend the capital gains inclusion rate. The old policy had an inclusion rate of 50%, meaning half of any capital gain is tax-free while the other half is taxed at the individual's or business’s marginal tax rate. The new rules, which came into effect June 18th, bring the inclusion rate for businesses up to 67%. For individuals, capital gains exceeding $250,000 are now subject to a 67% inclusion rate for the portion above $250,000.

The new policy has had some negative consequences for the real estate sector in BC. The change applies to any capital gain realized after June 18th, regardless of the original purchase date of the property, retroactively adding a tax burden. This policy change, along with others aimed at investors, has reduced demand in the market. Given the critical role that investors play in bringing new supply to market through pre-sale, this change will have a negative impact on new housing additions.

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