Today, October 3, 2016, the Canadian Government has taken steps to close the housing tax loophole. Finance Minister Bill Morneau stated "You need to live here, in Canada, in order to benefit from our tax exemptions."
“Up until now, anyone who sold their principal residence in Canada did not have to report that sale to the Canada Revenue Agency, or the profit earned on that sale. The reason was that the CRA provides a tax exemption on property that is used as your primary home.
As of today, however, the federal government will now require all Canadians tax-filers to report the sale of each and every property sold in the country. As with all assets, taxes are owed, however, if the property is a principal residence it’s still exempt.”
This move is one way the federal government is hopeful will help cool the real estate markets of the larger Canadian cities, while having little to no effect on the small communities.
“We recognize that there are different housing markets in different parts of the country and multiple factors that impact these markets,” says Morneau. “We believe these measures ensures tax fairness.”
This however does not spell the end of tax loopholes for foreign investors.
“However other tax loopholes remain—available for use by anyone with the money to do so.
For instance, wealthy foreign property buyers can continue to avoid paying taxes on property bought and sold in Canada using a type of trust known as a bare or basic trust.”