Capital gains tax changes affecting homeowners in the Ottawa Valley

Capital gains tax changes affecting homeowners in the Ottawa Valley
Capital gains tax changes affecting homeowners in the Ottawa Valley

The federal government’s increased interest rate went into effect on Tuesday.

It means that two-thirds of profits over $250,000 made from sales will be subject to federal tax. Previously, only 50 percent of profits over $250,000 were taxed.

For people like Andree Cooligan, who has her cottage in the Lanark area for sale, it means she will likely have to pay more tax when it is eventually sold.

“There’s just under half a million on the list,” she told CTV News. “And when I bought it 21 years ago, I bought a little piece.”

Cooligan has now expanded her waterfront property on Bennett Lake to three acres. But with the recent rapid rise in property values, this means the price she will sell it for will likely be more than $250,000 higher than she bought it for.

“This place is very modest. However, the reason it has value is not necessarily these buildings. It’s the land,” Cooligan said. “Yes, there will be capital gains for me. Yes, I will pay it. And yes, it will be more than if I had sold last year.”

The higher capital gains tax rate was introduced by the federal government to ensure that the wealthiest Canadians pay a fairer share of taxes.

The government expects the new tariff to generate $6.9 billion.

But Carleton Place real estate agent Stephanie Mols says this isn’t fair to many in the middle class, many of whom have lost their cottages or holiday homes due to inflation, or inherited secondary properties.

“This is a real boon for people who have a lake house or inherited a cottage where the land was transferred for $1 to exchange the title,” she says.

According to Mols, there are about 150,000 homes in the Ottawa Valley region, and those valued between $500,000 and $1 million have been hit the hardest.

“Once we had the announcement, a lot of offers went up, and I would say deliberately undervalued to make sure they sell it (before the deadline).”

The Valley-based real estate agent says those who were unable to sell in time to maximize their profits should wait until a political shift occurs where the increase in the withdrawal rate can be reversed.

“My personal opinion is: If you haven’t sold your house so far, hold on to it.”