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Ask the Expert: Steve Garganis – With the capital gains tax hike on its way out, is this your chance to buy an investment property?
– canadamortgagenews.ca
With the capital gains tax increase looking less and less likely, how should Canadians be thinking about investment properties? Is now the time to buy?
Earlier this year, the federal government announced that it will be deferring the effective date for the proposed capital gains inclusion rate increase to 66.67% from 50% to January 1, 2026.
The proposal to increase to the capital gains tax was first introduced last April applicable to gains above $250,000. (For gains below $250,000, the same 50% capital gains tax would apply.) However, the government didn’t have the opportunity to table the legislation before parliament was prorogued.
However, this capital gains tax increase would have left some people in a tough position.
Related: How capital gains taxes work in Canada
Some that entered into new construction agreements in 2022 were the most vulnerable, as they would have purchased when real estate values were inflated during the lower COVID-era mortgage rates…
The Bank of Canada (BoC) lowered its overnight lending rate—which lenders use to set their prime rates, and, by extension, variable mortgage rates—by another quarter of a percentage, bringing it to 2.75%. This rate now sits a full 225 basis points lower than when the BoC first kicked off its rate cutting cycle inJune 2024. As a result, the prime rate at most Canadian lenders will lower to 4.95%.
The main impetus behind today’s rate cut is the economic fallout from U.S. tariff threats, which have been ongoing—and rapidly evolving—since the start of the year. After initially vowing to implement blanket 25% tariffs on all Canadian imports to the States, with a 10% tariff on energy, on February 4, U.S. President Donald Trump delayed their implementation to March 4, and again to an even later April 2 deadline…
