Let’s start this one out with a bang and get right to the point, shall we?
Define “fear mongering.”
Alright, you stayed up last night to watch the SuperBowl, you’re in a nacho-induced coma, and you’re feeling sluggish. It’s also a Monday, so your brain isn’t firing on all cylinders.
It’s fine. I’ll define it for you:
The action of deliberately arousing public fear or alarm about a particular issue.
Publicly?
I don’t know about that, although I suppose some fear-mongering is done in public.
But what I’m wondering is: is there an inherent level of exaggeration in fear-mongering?
Another definition reads:
The tactic of intentionally spreading exaggerated information to create fear and anxiety, manipulating people’s emotions to gain attention, influence behavior, or achieve a specific goal, often seen in politics, media, and advertising by focusing on worst-case scenarios.
Ah, alright! This definition makes sense to me.
The reason that I ask this question to start today’s blog is that I already know at least one person who is going to take issue with my opinions. I mean, I’m going to talk politics, and I might “stir the pot” a bit, so I think many people will take issue, but I digress…
Over the holidays, I met a real estate agent through a friend-of-a-friend who said, “I used to read your blog a lot. I read it for years. But when you discuss politics on the blog and how this city, province, or country is being run, I feel like you resort to fear-mongering to make a point.”
Really?
Is that what I do on here?
I mean, I primarily discuss the real estate market, but it’s impossible to discuss real estate, economics, and personal finance without wading into socio-economics, and that brings us into the world of politics.
And when it comes to politics, it’s impossible to have an opinion that won’t be at odds with at least one other person.
So wouldn’t all discussions of potential political moves, decisions, and legislative implementation represent some sort of fear-mongering to those who have different political beliefs?
In preparation for today’s blog post, I decided to Google the following keywords together: “primary residence exemption” and then add “Toronto Realty Blog.”
Who knows what could come up in the search results, right?
Sure enough, found a blog post that I wrote over five years ago:
August 6, 2020: “Capital Gains Tax On Primary Residences Is Coming”
Ah, maybe that’s what she meant by fear-mongering!
Writing “something that’s exaggerated to create fear and anxiety,” as the definition goes.
Except that wasn’t the intention.
While this was written over five years ago, and we haven’t seen the capital gains on primary residences happen yet, it doesn’t mean it’s never going to happen. This is something that’s been discussed over and over, throughout the last decade (or more?) and with the country clearly starved for additional tax revenue, it’s something that will continue to be discussed for years to come.
So is predicting, offering, or discussing this “too far in advance of implementation” considered fear-mongering? Or, to the contrary, when it finally happens, can I say that I was early to predict it?
For what it’s worth, that blog post resulted in 180 comments from the readers, which is a TRB all-time record. That, more than anything, tells me that people have a very strong opinion on the way that real estate is taxed in this country.
Comments are down significantly over the last few years, as there are infinitely more websites, blogs, news sources, social media channels, and smartphone apps that fight for the attention of the eight billion people in the world, but something tells me that we’ll have a fair discussion on the blog today.
While I used to describe myself as a “fiscal conservative and social liberal,” the world has changed so much over the years that to define the cereal you’re having for breakfast seems like an impossible task.
I used to say that I believed in common sense, logic, and reason, but that’s been turned upside down.
I would also add that if I were to choose a single word in the English language today, which I understand the current meaning of less than any other word, it would be the word “fair.”
“It’s time they pay their fair share,” say politicians who seem to believe that a marginal tax rate of 54% isn’t enough, and when that rate comes after 13% HST on all after-tax purchases, property taxes, eco-taxes, capital gains taxes, and of course, land transfer tax.
You’ve heard this from me before, but I’ll say it again:
I don’t know of a population anywhere else in the world where people are so willing to give up their rights and freedoms.
I’ve already said too much on the political front, so I’ll save you all my examples. But the one example that I do want to discuss today comes to us via the following article in the Globe & Mail from before the holidays:
‘I Have All The Houses I Need’: A 47-Year-Old Entrepreneur Mulls What To Do After Inheriting Several Homes
The Globe & Mail
December 10th, 2025
This article reads to me like a propaganda piece, if I’m being honest.
The Globe & Mail seems to have found a self-hating individual who wants to change the entire system to absolve him of his guilt.
See? There I go again with my opinion.
Let’s go through the article, and at the end, you can tell me if you agree with my view of this individual’s mindset…
Here’s what happened, as the article explains:
After the death of a parent three years ago, David and his wife inherited the first of many properties: A $2.3-million home in the Greater Toronto Area. Last summer, when his (divorced) father died, David also inherited his $1.5-million home. All this atop David’s own immediate family home, a perfectly-sufficient-sized house worth about $3-million, which he also owns. “I have all the houses I need and don’t need any more houses,” he says. Too bad, David: Coming up next, he’s also in line to receive a million-dollar-ish condo downtown.
He and I share a name.
Is that irony? Or is that whichever God you believe in, trying to get my attention?
The protagonist tells us, “I have all the houses I need, and I don’t need any more houses.”
That’s totally fine. To each, their own.
I believe in free will, and if this man wants to refuse the inheritance or give away the proceeds, who are we to stop him?
But here’s what comes next:
Though originally concerned about an epic looming tax bill from his first (and most expensive) inherited property, David instead found himself on the other end of the tax spectrum. “Because it was my mom’s primary residence and because we decided to sell the house pretty immediately, I discovered we were completely exempt from taxes,” David said. “Minus real estate fees, the rest was just deposited into our bank accounts tax-free.”
For that, David can thank the “principal residence exemption” – probably the largest tax break regular citizens will ever get in this lifetime, although David could receive it any number of times. Provided the homeowner(s) meet the requirements, a designated principal residence can shelter most – or all – profits from a sale from capital gains tax.
Exactly.
Those are the laws that govern us.
Canadians are among the highest taxed citizens on the planet, and one of our saving graces is the tax-free capital gain on a primary residence.
Dying is also very expensive in Canada, and the government inherits a portion of the deceased individual’s estate. So does it not seem “fair” that tax law allows for the primary residence exemption to be part of the inheritance?
“Fair” is a tough word to define, and the definition is changing rapidly.
As the article continues, there’s a point where things go really off the rails for me.
From the article:
David has conflicted feelings about his supposed good fortune. “We’re now the beneficiaries of three tax-free pieces of residential real estate,” he explains. Unfortunately, it doesn’t feel as good as it sounds.
“It kinda upsets me, to be honest,” admits David. “Yes, I’ve benefited significantly from this system. Yes, my kids will probably benefit too. But what about everybody else? Do people like me deserve these tax incentives when other people don’t have homes at all?”
Like many Canadians, David sees an increasingly unfair real estate market where homeowners are getting infinitely richer while everyone else is squeezed out.
“I don’t think it’s reasonable that there’s an infinite tax holiday for people who are already so far ahead,” says David, who, despite his personal financial situation, still believes the exemption should be capped and taxed accordingly
“I realize this is an unpopular opinion, but I think it has to happen. Otherwise, the system is just too easy to game and keep gaming.”
Oh, this is sooooo 2026!
The world is full of people who don’t like themselves. But instead of trying to change the things they like about themselves, they want to change other people, or the world as a whole. You see this everywhere, all the time. Just a steady stream of finger-wagging as you’re told how to act and what to think.
Our protagonist, “David,” is feeling guilty about his wealth, and that’s his right. People are allowed to feel however they want to feel. I tell my kids this every single day!
But instead of “David” giving away the sale proceeds of his inheritance, he’s decided that we need to change the entire system.
This is the world we live in today, through and through, although we have among the most extreme examples here.
While this article is not an editorial, it’s certainly editorialized.
To use the words, “Like many Canadians,” before explaining how the protagonist feels, the author is simply making a claim without offering any proof.
Which Canadians? Who? Where is this data coming from?
I’m sure there are folks who feel that way, but how many? And how many of these people are homeowners? To say that “many Canadians feel this way,” and then find out that 99% of those surveyed are people who don’t own their homes and wouldn’t benefit from the real estate market, is like surveying old people and finding that 99% of them feel old.
This feels like a setup piece, doesn’t it?
Some people don’t like the idea of the tax-free capital gain, and there’s no better way to suggest it needs to be removed than to find an individual who benefits from it, but thinks it’s unfair.
But taxes don’t solve problems, unfortunately. They never have and they never will.
I’ve written about this so many times here on TRB. Whenever there’s a problem in our society, instead of addressing the actual issue, the government offers a solution whereby we tax the problem away! Or in the case of the article above, remove a tax exemption.
Taxes have never solved a problem, however. They’re simply revenue-generators for levels of government that, at least theoretically, could use the proceeds to address these issues.
“Theoretically” is the key word there.
We can see examples of this everywhere we look. Pick one that you like, and I’ll do the same. In fact, I’ll pick a very contentious one to really hammer home my point, and also to show that I’m not afraid of a healthy debate.
I laugh at the idea that introducing a carbon tax is the best way to reduce greenhouse gas emissions. It’s not. It’s simply a government that wants to appease the individuals clamouring, “do something about climate change,” while also generating revenue for government coffers. Total win-win.
But at the risk of running exceptionally off-topic here for a moment, I would offer that what this is all heading towards is a morals tax. Because isn’t that what our protagonist in the article, David, is struggling with?
Call it a “license” or a “permit” if you want to, but I envision a day when individuals who want to do something seen as bad, like lighting a campfire for their kids to roast marshmallows or driving a gas-powered car, will require the pre-purchase of some sort of “credit” from the government.
It’s a tax. That’s all it is.
A morals tax. A “doing something I shouldn’t be doing” tax, and the ones making the decision on what you should or shouldn’t be doing are those who hold public office.
For the life of me, I can’t figure out what we should or shouldn’t be doing anymore. Does anybody else feel that way?
Gambling used to be bad, but now it’s awesome, and everybody should do it. Marijuana used to be illegal, but now it’s sold next to your kid’s daycare.
We’ve replaced restaurants, shops, cafes, and the “social fabric of our communities” with marijuana shops. In Leaside, on the east side of Bayview Avenue, south of Millwood Road, there are two weed shops, side-by-side.
And when was the last time you watched a sports event on television without being bombarded with mid-game point spreads and advertisements with celebrities glorifying gambling – something that overwhelmingly affects the lower-income population?
This is simply about revenue generation. Gambling and weed make a ton of money for the government, but I don’t see a moral distinction between driving a gas-powered car and drinking booze, smoking weed, and gambling.
So excuse the extreme tangent there, folks, but I can’t wrap my head around a Canadian who’s wrestling with the guilt of inheriting money so badly that he’s begging the government to take his rights away.
Instead of donating the money to the charities, individuals, or places of his choosing, he’s grandstanding in the media and calling for the system to be changed.
Maybe that would make the system more “fair.”
While I don’t believe that the current federal Liberals will change the primary residence exemption because they rely so heavily on the older vote, I’m absolutely certain a future party will.
The additional tax revenue is a gold mine in waiting, and this country is running on money we don’t have, as we continue to spend more and more of it.
And the best part is, as with all new policies or taxes introduced by the government, when the capital gains exemption is finally removed, we’ll be told that this is what we wanted, and what we’ve been asking for! I can see it now:
“We’ve listened to your concerns, and we hear you loud and clear! So today, we are happy to announce that we’re removing the capital gains exemption on primary residences, to remove your conscience from the heavy burden you’ve endured…”
Wait…..is this fear-mongering?
I’m asking for a friend…
Eddie
at 6:55 am
“In Leaside, on the east side of Bayview Avenue, south of Millwood Road, there are two weed shops, side-by-side.”
And only one LCBO store across the street.
I am still trying to wrap my head around the fact that it is now easier for me to buy weed than it is to buy booze.
Appraiser
at 7:45 am
Won’t happen under Carney. One of the first acts he committed as PM was to reverse the changes to the capital gains tax exemption on investment properties that had been increased by Trudeau.
Also he immediately scrapped the consumer carbon tax.
If it happens (not likely) it will be a conservative government that enacts the legislation.
Anwar
at 12:22 pm
I’ll concede that Mark Carney has been better than his predecessor, but if we’re marking an argument that Carney is good because he’s better than the worst Prime Minister in the history of the country, who set our country and economy back a generation, then that’s really not saying a whole lot.
Katie
at 8:18 am
David, in the age of social media, the term fear-mongering has been replaced by the term “rage-baiting.” It’s like next level “clickbait” but angrier.
David Fleming
at 9:59 pm
@ Katie
I was told by my web development team that a member of their staff “hate-reads” my blog. I was a bit hurt at first, until they convinced me that this is a good thing.
I’m getting old…
Serge
at 8:47 am
This issue was only hot during speculative phase of the market, not in a saturation phase. Who has talked about it in the last three years? Any government needs it as a carrot for the masses.
Jason
at 9:04 am
The timing of this article is impeccable:
https://nationalpost.com/opinion/matthew-lau-carney-government-should-scrap-all-damaging-ev-policies
Crofty
at 10:30 am
Right-Wing White Guy Bemoans “High Taxes” While Ignoring Fellow Citizens Who Rely on Social Programs. Film at eleven.
Theo
at 12:15 pm
#Gaslighting
#StrawmanArgument
Libertarian
at 11:36 am
I agree with a lot of what you wrote David, but one thing where we might have a difference is the guy in the article said in his last sentence:
“I realize this is an unpopular opinion, but I think it has to happen. Otherwise, the system is just too easy to game and keep gaming.”
I’m not an estate expert, so perhaps you can educate me (and the rest of us), but it seems the primary residence exemption applies even after death. Sounds like this guy’s parents got divorced and re-married, and now he’s inherited three properties and will also inherit a fourth. So his mother, father, about both step-parents leave him their properties. All tax free? I think that’s what he means by “gaming” the system. Why does he get 4 properties tax free?
So many questions here. I understand this is a very unique situation and for most people, a husband and wife live in the same house for 50 years, so they should be able to sell it tax free. But if there are divorces and re-marriages and moving to other homes, etc., etc., why would a step-parent’s house be inherited tax free? It’s like when flippers have multiple houses and claim they are all primary residences. You can’t have five primary residences at the same time.
Help me understand, please. Thanks!
QUIETBARD
at 12:02 pm
Im not an estate expert either! But I’ll take a stab at your question. First of all we should acknowledge the bizarre nature of the situation. This rich David seems to have rich parents who divorced and married other rich people. All of whom seem to want to give rich David their primary residence and dont have any other children and/or meaningful randos in their life who could have received a portion of the inheritance. Also, it seems rich David is set to only inherit primary residences. No liquid assets, no yachts cottages or the like. Very fortunate if you ask me. The key sentence in the article that was quoted which I bracketed because I cant seem to bold it “Because it was my mom’s primary residence and [because we decided to sell the house pretty immediately], I discovered we were completely exempt from taxes” should give us a clue to the answer.
Basically at the time of death a persons wealth is turned into an estate (I made this part up as I dont know what happens but Im pretty sure im close) and a valuation date is set in that moment of time. This valuation date determines the value of everything and if any taxes are due they would be calculated here. For example if you bought a primary residence in 2000 for $1million and now its worth $3 million its tax free. Not tax on valuation date which is 2026 in this example. If you bought a cottage in 2000 for $100K and now its worth $1million there is tax to be paid. However, if the inheritor decided to hold both assets until 2036 they would be subject to tax based on the new value compared to the valuation date of 2026. Not 2000. What this means is that once the estate is created all tax should be accounted for and the estate is in the hands of the inheritor as his own wealth and subject to tax based on his circumstances. Another example is if the estate had a liquid portfolio of assets they would (probably) be sold and converted to cash and taxes would be taken accordingly. All this to say its not that rich David is gaming the system. His parents and step parents bequeathed him their PR homes which isnt subject to capital gains tax. The parents are the beneficiaries who decide to pass on the benefit to only rich David.
As for your example of flippers with multiple homes. Thats just illegal. But the CRA cant be bothered to go after those guys for some reason.
Libertarian
at 4:11 pm
I agree that it probably works something like that. Nobody is accusing anybody of doing anything illegal.
As I was writing my above comment, I was thinking about RSPs and TFSAs. You can leave those to a spouse tax free, but not your kids. So I thought it would have been the same with houses.
Anyway, the bottom line is if the house is sold immediately, it’s considered sold by the deceased and not the person(s) who inherited it. I still don’t know whether I agree with that. If that’s the case, it should apply to RSPs and TFSAs as well since those are tax shelters as well.
Interesting debate.
QUIETBARD
at 11:38 am
I always assumed you talking politics was mostly to get stuff off your chest. Kind of like therapy where we the readers are a collective therapist and you spill your guts to us. Also like therapy, we don’t provide much value other than saying “give us more” or the occasional “atta boy”. To each their own I guess.
Reading the title I thought we would be discussing the merits of keeping/removing the PR exemption but thats not what ended up happening. Maybe David, the rich one, should try therapy. Or writing a blog. 🙂
Ace Goodheart
at 11:52 am
Just looking at the listings in our area on Monday morning. The one “good house” available here in the Bloor West / Junction area, just sold apparently over the weekend (maybe Friday was “offer night”?) for $411,000 over asking (that is a lot, even for this area).
Bosley had the listing so David probably knows about it (on Beresford, Runnymede school zone).
This is exactly what I see happening here, lots of “not so great” houses sitting basically forever, but when something that a family could just move into and enjoy with no work required, comes online, it is swarmed and there is a bidding war.
The problem seems to not be that there are no buyers.
The problem seems to be that there is nothing to buy. Plenty of buyers, no houses. Quality listings get swarmed.
Everything else seems to be either vastly over priced for the market, or houses that are in poor shape, usually split up into apartments (often with the tenants still present and obviously refusing to leave), or houses on bad lots or with no parking on busy streets, unrenovated and in poor shape.
Jaded inTO
at 1:57 pm
“…lighting a campfire for their kids to roast marshmallows”, where have you been? Ontario fire code:
(1) Open-air burning shall not take place unless
(a) it has been approved, or
(b) the open-air burning consists of a small, confined fire that is
(i) used to cook food on a grill, barbecue or spit,
(ii) commensurate with the type and quantity of food being cooked, and
(iii) supervised at all times.
Do you think lighing up a Solo Stove Yukon meets B(ii)?
Theo
at 3:07 pm
^Also gaslighting.
He’s talking about a campfire and kids roasting marshmallows and you’re talking about yuppie fire pits.
He’s talking about the government charging us a fee for breaking their moral compass in half and you’re talking about fire code.
I bet you’re the guy who looks forward to filing his vacant home tax.
Jaded inTO
at 5:41 pm
Read his paragraph again. I’m pointing out we’ve long past the point of absured rules, fees, by-laws etc.
Are you saying goverment is morally obligated to provide the PRE? The PRE should remain. If it’s removed, there has to be a grandfathering effect on pregnant gains, future cost (interest, renovations etc.) added to ACB and replacement rules when upgarding to a hew house (similar to US).
Ace Goodheart
at 2:35 pm
For most people, the PR tax exemption doesn’t result in multi million dollar windfall profits.
It just results in the person being able to sell a house, pay real estate commission and land transfer taxes, pay out the mortgage(s), and purchase another house with some form of downpayment.
However, as the Globe story does show, the PR exemption, applied evenly to everyone, does result in unfairness in some limited, isolated circumstances.
Perhaps, in the situation where someone inherits two mortgage free houses and the windfall to them is in the multiples of millions, we tax them at 54% and take half of it?
Would that satisfy David?
What I am saying is the solution to this problem is not to tax everyone who owns and wants to sell a house.
Most people who own and want to sell houses, have limited equity available and cannot afford to pay a huge tax on it. It may be true that the value of your house increased by 500K since you bought it ten years ago, however the value of every other house did too. So if you are forced to add $250,000 to your income and pay tax on it at the top marginal rate of 54%, the result is you cannot afford to purchase another house.
Ending the PR tax exemption will have the most obvious result of locking people in their homes. Moving will no longer be possible.
The home equity tax would hit people at the top end of their incomes. This is because it is added to your taxable income for the year. So if you already earn 150K per year, and you sell your house, and end up with a 300K 1/2 capital gain inclusion, guess what, you now earned 450K the year you sold your home. That is 54% tax on everything over 220K.
You have no equity left to purchase another house. People will do the math, and just stay put. You can’t sell anymore.
So yeah, if people who inherit houses want to pay their fair share of tax, there is a voluntary tax option on your return every year. Pay as much extra as you like. I think it all goes to the national debt or something? Just pay your millions to the government if it makes you feel better.
But not everyone is house rich and most of us are just lucky to get by every month. And we need all the equity that we have.
Derek
at 3:22 pm
https://giphy.com/gifs/moodman-YRuFixSNWFVcXaxpmX
cyber
at 3:39 pm
So the argument is, people who “made” $500k in home equity appreciation gains won’t become a “move up buyer” if those gains are so drastically reduced to become…gasp!… “only” circa 375K after all that taxation?
Gotcha.
And the tiniest of violins will be playing for those folks forced (through their own choice) to keep “slumming it” in a $1.5M property (purchased for $1M) instead of moving up to merely a 1.89M “upgrade” property… since the $2M one they rightfully earned through the hard work of being a Toronto property owner is now out of reach ?
Ace Goodheart
at 4:42 pm
Have you ever owned a house?
That 500k “profit” over a ten year period, comes with a lot of hard work.
Houses don’t carry for free. If you’ve owned it for ten years, you’ve paid five or six figures in mortgage interest, all of which money you’ve worked for. You’ve also paid property tax, you spent 7k to replace the furnace when it blew up three Februaries ago. You’ve cleaned the house every week for ten years, so the floors shine, the kitchen isn’t full of ants and cockroaches, and the bathrooms aren’t covered in mould.
You spent 6 figures on various necessary renos, including the new roof, and rebuilding the front porch after it collapsed four winters ago.
You did the basement yourself and that took up every weekend you had for eight months, and cost 30k including permits and materials.
Now someone who has never owned real estate wants to tell you, that you got that 500k “capital gain” entirely for free? While you slept? You did nothing for it?
Right, ok sure.
Maybe buy a house, keep it for ten years, then come and talk to me about how easy it was.
cyber
at 4:54 pm
Condo maintenance fees are not tax deductible for owner occupied properties, and most things you listed is basically what they typically cover just in detached homes context.
Renters don’t get to write off cleaning supplies or cleaning services.
Libertarian
at 4:23 pm
Further to my comments above, I think there should be a difference (or at least let’s have a debate) between whether the homeowner sells the house while alive or it sold after their death.
If someone is moving up the property ladder, that’s fine. Keep the PRE. But after you pass, should your third cousin’s kid get it tax free because he cut the grass on weekends?
My guess is people will say the same thing they say about the debate to cut back OAS. They say they paid into it all their life, so they should be able to collect now. They owned the house, so the PRE should apply to their estate. I’m not sure I agree about PRE for estates.
Derek
at 4:40 pm
If there were no PRE, would we be able to deduct the interest paid over the life of the mortgage from the gain? Would you be able to deduct your home expenses, maintenance costs, infrastructure replacement costs, and / or renovation costs from your gain? Would you be able to claim a capital loss selling your house in 2026 that you bought in 2022?
marmota
at 9:01 am
This…
On every sale we have to pay for realtor fee, land transfer taxes, closing costs, many times interest penalties, and on top of that a chunk of taxes at marginal rate?
Appreciation would have to be so high to even break even, no one would move. I can think of so many scenarios where people would be even more trapped in their current properties, and less likely to even be able to buy.
Once you remove the exemption, why not go a step further and tax it like a car:
Government takes their pound of flesh on every transaction regardless of the value. The car is taxed when new and taxed over and over and over again at each transaction, even though it’s value usually goes down at each sale. I’m sure there are cars out there that the government collected more taxes on it than the original cost of the car.
Jenn
at 8:26 pm
Wow David you certainly know how to light a fire and run away! 😂
David Fleming
at 9:58 pm
@ Jenn
I don’t think that’s necessarily true. I’m always here; always checking in on the comments and seeing where my reply is needed.
This topic has been in my queue for a long time. Not only that, it extends into other areas of debate and discussion (taxation, public policy, politics, etc), so I thought it might be fun!
David Fleming
at 9:29 am
Derek –
I don’t want to say “I told you so,” but………..Anthony Sandtander……wow….
Derek
at 10:37 am
Ugh.