Pierre Poilievre’s proposed capital gains deferral plan has sparked debate about its potential impact on Canada’s housing market.
The policy, which allows investors to defer paying capital gains taxes if they reinvest their profits in Canada, could offer some benefits - particularly in boosting the supply of purpose-built rental housing. However, when applied to the broader housing market, especially owner-occupied homes and investment properties, it risks worsening affordability and further entrenching the financialization of housing.
At a time when Canada faces a shortage of rental housing, this policy could incentivize developers to build more rental properties. Many companies that specialize in constructing purpose-built rentals prefer to sell completed projects to institutional investors or property management firms that handle long-term operations. Poilievre’s plan could encourage these developers to reinvest their profits in new projects by allowing them to defer capital gains taxes when they sell, stimulating further construction.
If executed correctly, this could increase the supply of rental housing, helping stabilize rents and providing more affordable options for Canadians who cannot afford to buy homes. Purpose-built rental units are a critical part of addressing Canada’s housing shortage.
However, while this policy could encourage more rental construction, it carries significant downsides when applied to other areas of the housing market - particularly owner-occupied homes and investment properties. By allowing investors to defer capital gains taxes, the policy makes real estate an even more attractive investment vehicle. This is especially concerning when individual investors and corporations buy up single-family homes, fueling the financialization of housing - where homes are treated as financial assets rather than places to live.
For baby boomers sitting on substantial home equity or corporations with deep pockets, Poilievre’s plan provides an opportunity to roll over their profits into more properties without facing an immediate tax hit. This could lead to more speculative investment in the housing market, driving up prices and making it even harder for young Canadians to enter the market. As a result, homeownership would move further out of reach for younger generations, who are already struggling to save for down payments amid skyrocketing home prices.
Moreover, the policy encourages more of Canada’s wealth to flow into functionless, extractive investments like housing, rather than supporting productive sectors such as technology, manufacturing, and entrepreneurship. A smarter approach would be to offer tax incentives to those building businesses, creating jobs, and driving innovation - not to those parking their money in residential properties.
It’s also clear that this policy is aimed at attracting the boomer vote, but it does so at the expense of younger Canadians who are being priced out of homeownership. While there’s a valid argument for using capital gains deferrals to encourage the development of purpose-built rental housing, applying the same incentives to owner-occupied homes and investment properties risks exacerbating Canada’s housing crisis.
If Poilievre’s plan moves forward without addressing these unintended consequences, it could deepen generational divides and accelerate the transformation of Canada’s housing market into a vehicle for wealth accumulation - rather than a system that provides secure and affordable homes for Canadians.
John Pasalis is President of Realosophy Realty. A specialist in real estate data analysis, John’s research focuses on unlocking micro trends in the Greater Toronto Area real estate market. His research has been utilized by the Bank of Canada, the Canadian Mortgage and Housing Corporation (CMHC) and the International Monetary Fund (IMF).
Have questions about your own moves in the Toronto area as a buyer, seller, investor or renter? Book a no-obligation consult with John and his team at a Realosophy here: https://www.movesmartly.com/meetjohn
April 1, 2025
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