One of the announcements in the federal government’s Budget 2024 was the capital gains inclusion rate being increased from 50 per cent to 66.7 per cent — something that will impact many secondary homeowners, like those who have a cottage.
Effectively, this means that if they sell their secondary property after June 25 this year, they’ll be taxed 66.7 per cent of all capital gains above $250,000.
Ontario cottage country’s benchmark prices climbing faster than major markets
Prior to this, Ontario’s cottage country was already experiencing an active spring season, with home prices up since January and plenty of new listings. Zoocasa analyzed how benchmark home prices for 11 markets in the area have changed since January and found that all but one market has experienced price growth of over 6 per cent.
Benchmark prices in Georgian Bay, Tiny, Lake of Bays and Muskoka Lakes have risen by over 11 per cent since January. In Muskoka Lakes, that’s more than a $140,000 increase, while in Lake of Bays and Georgian Bay, it’s over $90,000. This price growth is over double that of other Canadian markets, including Toronto where the benchmark home price increased by 5.9 per cent from January, and Vancouver, where it’s increased by 3.8 per cent.
Waterfront properties: Prices mostly dropped, more inventory and sales
Despite these large jumps, while the median price for all waterfront properties in the Lakelands has increased since January by 6.2 per cent, year-over-year the price has dropped by 1.9 per cent. In Lakelands Central and Lakelands North, the median price has dropped year-over-year by 4.0 per cent and 0.7 per cent respectively. Lakelands West, with much fewer properties for sale, had a median waterfront property price increase of 16.1 per cent (to $905,000).
When it comes to inventory of waterfront properties, there’s been a marked increase. In Lakelands North, new listings increased year-over-year by 61 per cent in April, while in Lakelands West and Lakelands Central, new listings rose year-over-year by 48.6 per cent and 40 per cent, respectively. Year-over-year waterfront home sales are up in both Lakelands West and Lakelands North.
Where the capital gains tax fits in
While it’s tough to say whether the new listings are a result of the capital gains tax increase, particularly since spring is a busy time, the tax may be putting extra pressure on those who were unsure if they wanted to hold onto their secondary properties. And, according to Budget 2024, just 0.13 per cent of Canadians with an average income of $1.4 million are expected to pay more each year because of the inclusion rate increase.
Read the full report here.
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This article was complied with AI assistance and reviewed by an editor. More information can be found in our T &C
