Taxation and the middle class

[taylortbb]

I suspect the current spike in listings is a result of the proposed capital gains inclusion rate increase. Anyone who sells within the next two months will likely save tens of thousands of dollars in taxes if they've held since 2019 or earlier.

The new higher capital gains rate only kicks in after $250K in gains (and appreciation of primary residences is not taxed, of course) so a $10K savings would require the unit to have appreciated by something like $370K; that amount would result in $20K additional taxable income and something like $10K in taxes. I don't think there are many investment condos that have appreciated that much. Maybe duplex/triplex houses, but I don't think it would significantly impact the number of listings at the moment.

The $250k is per person, not per property. Many investors own multiple units, so for that math to work they'd have to stagger sales at one unit per year, and that's assuming they don't have any other capital gains. Given property values aren't really on an upward trend right now, and mortgage renewals are likely to come with higher rates, I can easily see the change pushing someone over the edge to unload a few properties now.

Also, $370k in appreciation since 2018 doesn't seem that unlikely. Maybe not on a studio, but the small 2bd layout was very popular with investors at Charlie West. I think that would be up $370k since 2018.