Remember how selling your home and keeping any profit was just a thing? No big deal. Part of living in gentle, trusting Canada.

Well, trust left in 2016. Since then you must apply for the Principal Residence Exemption and pass a little test in order to keep your house money, avoiding capital gains tax. The rules are not that simple, either. Accountants love it.

The excuse at the time: evil foreign owners are not paying their fair share of tax, so this is a way to ensure only citizens benefit from the tax-free status of home profits. Consequently every property changing hands has to be registered with the CRA, not just with local bodies.

But this pathetic, suspicious blog saw it through a different lens. If a future government wanted to start taxing house profits, it sputtered, what better tool for the government than a registry of all recent transactions with dates and purchase prices attached?

This brings us to Adam Vaughan. The former Toronto alderguy is now a Liberal MP and the housing & urban affairs advisor to Justin Trudeau, the prime minister currently (desperately) seeking re-election. Some months ago AV got his colleagues in the Ontario Liberal caucus to support a proposal to – guess what? – tax capital gains on residential real estate.

In recent days the federal Conservatives have been making some hay with this, but there’s been virtually no notice given by mainstream media – unlike Thursday’s big announcement regarding the shared-equity mortgage. Here is a letter the Tory leader has been sending out:

'More taxes for out-of-control spending'

Click to enlarge

The Vaughan proposal is simple: anyone selling a house within a year of buying it would have 50% of any appreciation taxed. After two years the capital gains inclusion would be 25%, then 15% after three years, reduced thereafter to 10% and finally 5% in year five. Given the fact the average Canadian moves every six years, this would net a huge number of households.

What does this mean? Recall that today there is no tax on profits of a property declared as a PR in any one year by one spouse. That could be a house, a cottage or a vacation place in Florida (among other things). To claim the PR exemption, you must fill out the appropriate schedule on your T1 tax form, detailing date of purchase, sale and buying/selling values. Cool. But under the Ontario Liberal Caucus plan half the profit in the first year or two (if a sale happened) would be taxable at [50% x your marginal rate].

Presumably that’s to punish flippers/speckers/renovators who buy and sell in a rising market and plump home values. But that may be unnecessary, since the CRA is already whacking people it thinks are ‘trading’ in real estate, taxing gains as business income. The real kicker here is in subsequent years, since dumping a property three years after you obtain it hardly qualifies as a flip. Lots of people upsize, move, divorce, split, have kids or need to change jobs/cities. Why should they pay more?

Silly question. It’s a tax. Liberals like taxes. So does Adam, who was a notorious lefty when ensconced in Toronto’s city hall. Without a doubt, residential real estate represents the last, massive pool of virtually untapped tax revenue in a nation of overspendy governments that cannot balance their books. How is this proposal to suck off unearned housing gains a surprise? Politicians have been doing this for decades from financial investors. Exempting the family home while nailing the family savings hardly seems equitable.

Anyway, there you go. Now you know why the 2016 change happened. And while Mr. Socks will surely say young Scheer is a neocon, Harperesque, fear-mongering barbarian for bringing it up, and that this is just dirty politics, it’s worth a discussion.

By the way, Adam has not returned my phone call. Let me know if there’s anything you wish to pass on, when he does.