Will Mark Carney Tax Home Equity?

Concerns surrounding a tax on Canadians’ home equity are back in the news.

During Canada’s 2025 election campaign, Conservative leader Pierre Poilievre warned voters that Prime Minister Mark Carney and his Liberal government would eventually tap into homeowners’ equity to fund their aggressive spending plans. Poilievre, whose party will serve as the Official Opposition, pointed to the government’s spending projections that will depend on deficits to be financed.

“What happens when the finance officials tap them on the shoulder and say, ‘You’re out of money, you need to go find more?’ Well, they’re going to go out, and they’re going to tax your home equity. They’re going to go after your house,” he said at an April 21 Canadian Association of Retired Persons event.

“Bottom line is, Liberals will tax your home equity if you give them the chance in this election. We will never let that happen. Your home belongs to you, and when you sell, you should keep every single penny for yourself and your kids.”

It is no secret that more seniors plan to rely on their equity to fund their retirements. However, not only do many older Canadians depend on their house for retirement. A June 2022 poll by RATESDOTCA found that nearly one-quarter (24 percent) of all homeowners anticipate tapping into their home equity to pay for at least some of their retirement.

Today, Canadians are exempt from paying capital gains taxes on the sale of their homes, although former Prime Minister Justin Trudeau introduced house-flipping levies and raised the capital gains tax for recreational properties like cottages.

Ultimately, a home equity tax would be financially devastating for the current generation of homeowners.

That said, is there any basis for worries regarding a home equity tax? So far, the prime minister and his Grits have yet to propose this idea. “This is entirely false. This is another desperate attack from the Conservatives. They do this every election,” said Liberal spokesperson Mohammad Hussain following Poilievre’s remarks.

While politically unfeasible, the government has explored various concepts to reverse Canada’s housing affordability challenges, including a surtax.

The 2022 CMHC-Backed Report

Canada’s national housing agency partially supported a surtax on expensive homes.

In 2022, advocacy group Generation Squeeze published a study funded in part by the Canada Mortgage Housing Corporation (CMHC) and the National Housing Strategy. The report’s main takeaway is that a surtax on homes worth more than $1 million would help curb rising home prices.

According to the study, the authors proposed three tax brackets: 0.2 percent ($1 million to $1.5 million), 0.5 percent (up to $2 million), and one percent (over $2 million). The report estimates that the levy would generate $5 million annually, which would be used to fund new investments.

“Reducing the tax shelter will disrupt feedback loops that fuel rising home prices,” the report stated. “This would slow the escalation of home prices and improve affordability; reduce inequalities, including between renters/owners and younger/older Canadians; and attract savings and credit towards economic activity outside of the housing sector, which may produce more jobs and innovation than is often found in real estate.“

It has been three years since the report was released, and no politician has tabled a motion to implement this policy.

Instead, at least under the new government, Prime Minister Carney has proposed eliminating the GST on new homes priced between $1 million and $1.5 million, reducing municipal development charges for multi-unit residential housing, and providing $25 billion in financing for prefabricated home builders. The Liberal leader also wants to accelerate homebuilding, which would stabilize the Canadian real estate market.

Taxes Elsewhere

Still, at all three levels of government, homeowners should expect to pay higher housing-related taxes.

In British Columbia, for example, imposed a home flipping tax, effective Jan. 1. “Property purchased before the tax’s effective date may be subject to the tax if sold on or after January 1, 2025, and owned for less than 730 days, unless an exemption applies,” the province stated.

Toronto, one of the world’s largest real estate markets, introduced a 6.9 percent property tax hike for residential properties, the largest in more than 20 years.

Although it was instituted in May 2023, the Canadian government updated the Underused Housing Tax, which still imposes a one-percent annual tax on vacant or underused housing.

Living Paycheque to Paycheque

A January survey commissioned by the Royal Bank of Canada found that half of Canadians (55 percent) say they feel “financially paralyzed.”

Indeed, many Canadians are financially struggling in today’s economy, with trade disputes hanging over their heads.

According to an April survey by H&R Block Canada, two-thirds of Canadians worry about their financial well-being as they are not setting aside enough money for a rainy day. Additionally, 48 percent say they depend on credit cards to make large purchases, and close to one-fifth (17 percent) rely on buy now, pay later (BNPL) plans. More than half (56 percent) are concerned that they will have to go into debt to pay for an unexpected expense.

“It’s clear that Canadians are feeling the financial strain of not having enough money left from their paycheque to put into savings, given the high cost of living,” said Yannick Lemay, Tax Expert at H&R Block Canada, in a statement.

Why does this matter? If more Canadians feel like they are falling behind on their savings, then they are more likely to rely on their home equity in the future to pay for their lifestyle.