The federal government has announced a delay in implementing the proposed increase to the capital gains inclusion rate, pushing it back to January 1, 2026. Originally set to take effect on June 25, 2024, the change has been postponed to allow for further adjustments and the introduction of new exemptions aimed at protecting middle-class Canadians from higher tax burdens.
Finance Minister Dominic LeBlanc confirmed the decision on Friday, stating that the government’s goal is to ensure fairness in the tax system while minimizing the impact on average taxpayers. More details on the exemptions and how they will apply are expected to be released in the coming months.
The delay in the capital gains tax increase has significant implications for Toronto’s real estate market ( in my opinion), particularly for investors, landlords, and sellers of secondary properties. Here’s what it means:
1. More Time to Plan Sales and Transfers
Investors and property owners looking to sell investment properties, rental units, or secondary homes now have until January 1, 2026, before facing a potentially higher tax bill on capital gains. This gives sellers more time to structure transactions strategically, possibly deferring sales to maximize tax efficiency.
2. Potential Short-Term Market Boost
With the increase pushed back, some sellers may rush to list and close on their properties before the new deadline approaches.
What’s Next?
While the deferral provides breathing room, the federal government has hinted at new exemptions aimed at protecting middle-class Canadians. Real estate investors and sellers should stay informed about how these exemptions will apply and whether further tax adjustments are on the horizon.
Considering a sale or investment? Let’s discuss how this impacts your real estate strategy. Reach out today!
