Poilievre pledges to remove GST from purchase of new homes sold for under $1M - would this work?

[CdnFox]

Poilievre pledges to remove GST from purchase of new homes sold for under $1M | CBC News

Conservative Leader Pierre Poilievre is pledging to eliminate the GST on new homes sold for under $1 million if his party wins the next federal election.

 

Very interesting. Normally I detest any government plan that tries to solve the housing crisis by making it easier for people to afford a home. The reason for this is simple, any effort to make a home more affordable drives the price of the home up because that's how the market works.

So giving people down payments and so on and so forth only makes things worse over time and it's a cheap ass solution.

But this is kind of interesting. What he's doing is incentivizing Developers to specifically look for and develop homes that are going to be less than a million dollars to buy. Basically entry-level properties such as apartments and small townhouses. And if I read this right the rebate would only apply for the first purchase of a new home, so it gives the developer a slight edge in the market to build these kind of homes.

That might actually have a bit of a meaningful impact. At first glance it looks like a plan to make it easier to buy a home, but in reality it appears to be an incentive mechanism for getting developers to pump out the kind of housing we need profitably yet affordably.

It's possible that if there aren't enough Developers they'll still just scoop up the savings themselves but even then it's still incentivizes them to build more homes.

It'd be interesting to see what people actually thought about that idea

 

[herbie]

Yet another incentive to Get The F*ck out of the GTA and Lower Mainland.

[Legato]

3 hours ago, CdnFox said:

Poilievre pledges to remove GST from purchase of new homes sold for under $1M | CBC News

Conservative Leader Pierre Poilievre is pledging to eliminate the GST on new homes sold for under $1 million if his party wins the next federal election.

 

Very interesting. Normally I detest any government plan that tries to solve the housing crisis by making it easier for people to afford a home. The reason for this is simple, any effort to make a home more affordable drives the price of the home up because that's how the market works.

So giving people down payments and so on and so forth only makes things worse over time and it's a cheap ass solution.

But this is kind of interesting. What he's doing is incentivizing Developers to specifically look for and develop homes that are going to be less than a million dollars to buy. Basically entry-level properties such as apartments and small townhouses. And if I read this right the rebate would only apply for the first purchase of a new home, so it gives the developer a slight edge in the market to build these kind of homes.

That might actually have a bit of a meaningful impact. At first glance it looks like a plan to make it easier to buy a home, but in reality it appears to be an incentive mechanism for getting developers to pump out the kind of housing we need profitably yet affordably.

It's possible that if there aren't enough Developers they'll still just scoop up the savings themselves but even then it's still incentivizes them to build more homes.

It'd be interesting to see what people actually thought about that idea

 

I think you are correct about incentivising developers. Good thing all-round if it works.

The proof will be in the pudding. Ask Robo.

[CdnFox]

1 hour ago, herbie said:

Yet another incentive to Get The F*ck out of the GTA and Lower Mainland.

Why? How does that even make sense? how would this policy be bad for the gta or lower mainland?

1 minute ago, Legato said:

I think you are correct about incentivising developers. Good thing all-round if it works.

The proof will be in the pudding. Ask Robo.

No WONDER he keeps saying he needs more 'proof' even when we give him plenty, he's just hungry for pudding!  It all makes sense now! 

[Aristides]

I would be OK with it if it is just for first time buyers. Otherwise it is a reward for flippers.

[CdnFox]

1 hour ago, Aristides said:

I would be OK with it if it is just for first time buyers. Otherwise it is a reward for flippers.

It would only be on the first sale.  So it's not first time buyers but it still would not reward flippers. They'd have to pay the tax (or the next buyer would ) which ups the price. It would make it harder to flip.  You'd have to buy, and then hope it went up enough so that you could sell it for a price that covered the taxes on the next sale as well as making you a profit. 

 

[Army Guy]

On 11/5/2024 at 12:52 PM, Aristides said:

I would be OK with it if it is just for first time buyers. Otherwise it is a reward for flippers.

It's going to reward everyone, when has anyone complained about saving 40 K, or even half of that 20 K ....Can anyone say there is a liberal policy out there that offers more....not really....i think it is a start....

 

[CdnFox]

14 minutes ago, Army Guy said:

It's going to reward everyone, when has anyone complained about saving 40 K, or even half of that 20 K ....Can anyone say there is a liberal policy out there that offers more....not really....i think it is a start....

 

Well the thing is it actually doesn't reward everybody and that's very important. Any plan or program that makes it easier to buy a home only results in inflated home prices. If the government just gives $100 off per home then the price of homes goes up $100 very quickly.

But this is really to benefit the seller. And specifically only the developer seller. Which means it motivates them to build more homes of a certain type that meets the criteria and even if the market gets a little bit flooded that's okay because there's still room for them to make money because they won't have to pay the tax.

And that by its very nature will tend to bring the cost of the houses down. So in the long run I guess you're sort of right in that everybody will benefit but this is not really a program to make it easy to buy, it's a program to motivate developers to build more of a specific type to sell and I think it would probably be relatively successful

People buying the homes will probably get them below the cost of other homes that are not included in this deal and so they get a bit of a benefit there, but really it's about encouraging them to "build, baby, build". 

Edited November 7, 2024 by CdnFox

[Aristides]

13 minutes ago, Army Guy said:

It's going to reward everyone, when has anyone complained about saving 40 K, or even half of that 20 K ....Can anyone say there is a liberal policy out there that offers more....not really....i think it is a start....

 

I don't. You are a real estate speculator with bags of cash, you jump in and buy new units with no GST, then turn around and sell them to first time buyers who have to pay the GST. I'm not saying this is a bad idea, just that it needs a lot more explanation. That's the problem with PP, long on slogans, short on details.

[CdnFox]

41 minutes ago, Aristides said:

I don't. You are a real estate speculator with bags of cash, you jump in and buy new units with no GST, then turn around and sell them to first time buyers who have to pay the GST. I'm not saying this is a bad idea, just that it needs a lot more explanation. That's the problem with PP, long on slogans, short on details.

So where's the profit? IF you have to sell and include the gst then you have to sell for more than you bought for. Why wouldn't they just go buy the new one themselves instead? You're not going to be able to make a profit. Prices would have to go up by the value of the gst, the cost of buying and selling, and enough to make a profit.  Pretty unlikely. it discourages flipping.

At best  you could rent it out instead, but then you're increasing the number of rental units and that reduces rental prices. 

 

[Nationalist]

GST is a horrible tax and should be done away with completely. 

As for housing, if we have a shortage, GST on new homes is just plain old stupid.

[CdnFox]

4 hours ago, Nationalist said:

GST is a horrible tax and should be done away with completely. 

As for housing, if we have a shortage, GST on new homes is just plain old stupid.

Yes and no. If you remove the GST entirely then the price of houses just goes up to fill in the gap which means the price of land goes up which means it doesn't actually make any difference to the Developers

The problem we have now is that because of a shortage prices are as high as they can possibly be and still sell homes. That means approximately 20% of the market or more simply will never be able to afford a home and about another 25% will have to struggle like hell to make it work and can barely afford a home.

Because the vast majority of people have to have a mortgage, nothing changes that. If mortgage rates go up house prices drop but the monthly payments stay exactly the same. If you give everybody $1,000 discount then housing prices go up $1,000.

What is interesting about this is that it affects only some homes which are the exact homes that we want developers to focus on right now. Because it only affects the home once and only some homes, it actually does make a slight difference in pricing and offers an opportunity for additional profit for the developer and encourages the creation of those types of homes. It also puts a price cap on those types of homes because a developer would not want to exceed a sale price of a million dollars when they would then have to pay the tax again. So they'll make sure that the constructions come in as close to a million but under as possible and attempt to keep the pricing there.

In no way shape or form will it solve all of our problems but it might actually be one way to help relieve the pressure a little

[Nationalist]

8 minutes ago, CdnFox said:

Yes and no. If you remove the GST entirely then the price of houses just goes up to fill in the gap which means the price of land goes up which means it doesn't actually make any difference to the Developers

The problem we have now is that because of a shortage prices are as high as they can possibly be and still sell homes. That means approximately 20% of the market or more simply will never be able to afford a home and about another 25% will have to struggle like hell to make it work and can barely afford a home.

Because the vast majority of people have to have a mortgage, nothing changes that. If mortgage rates go up house prices drop but the monthly payments stay exactly the same. If you give everybody $1,000 discount then housing prices go up $1,000.

What is interesting about this is that it affects only some homes which are the exact homes that we want developers to focus on right now. Because it only affects the home once and only some homes, it actually does make a slight difference in pricing and offers an opportunity for additional profit for the developer and encourages the creation of those types of homes. It also puts a price cap on those types of homes because a developer would not want to exceed a sale price of a million dollars when they would then have to pay the tax again. So they'll make sure that the constructions come in as close to a million but under as possible and attempt to keep the pricing there.

In no way shape or form will it solve all of our problems but it might actually be one way to help relieve the pressure a little

It's an interesting take but I have to disagree that there are any benefits to either the GST or the Ontario HST.

To me, both are counter productive and dumb.

[CdnFox]

20 minutes ago, Nationalist said:

It's an interesting take but I have to disagree that there are any benefits to either the GST or the Ontario HST.

To me, both are counter productive and dumb.

Well, I guess another way to put my argument is if you're going to have those taxes in the first place then removing them in this fashion specifically is probably better than removing them all together as far as inspiring the creation of new housing. We can set aside whether or not there should be consumption tax at all for another time  

[Army Guy]

On 11/6/2024 at 9:29 PM, Aristides said:

I don't. You are a real estate speculator with bags of cash, you jump in and buy new units with no GST, then turn around and sell them to first time buyers who have to pay the GST. I'm not saying this is a bad idea, just that it needs a lot more explanation. That's the problem with PP, long on slogans, short on details.

That is possible, i don't even know how you could control that or any other variable , Buyers will generally shop around looking for the best deal, if thats not possible then they will pay the higher price if thats the home they want....I'm not sure how the market works in other provinces, but the Buyer is aware of how much the home sold for last...how much the land taxes are etc...if the buyer has any smarts they are not going to buy a home that sold for 500K then a months later is asking 580K...they are probably going to look for that contractor that is passing on some of those GST savings to the buyer like CDN fox suggested...

This is not the only PP plan to help build more homes...once again we should be asking what was any liberal policies in this regards, I'm not aware of very many... 

[CdnFox]

1 minute ago, Army Guy said:

That is possible,

It's not really possible.  What he's suggesting is that someoen would buy a house, then sell the house at a higher price than it was worth to pay the gst on the next sale.  How do you make money doing that?  If  i buy something for 100 dollars that you could also buy for 100 dollars, but i'm forced to sell it for 110 because of a new 10 dollar tax,  how do i sell it to you for enough money to make profit?

It would be a detriment to speculation. You'd have to hold the property for some time before it was worth more. 

[herbie]

[Aristides]

5 hours ago, Army Guy said:

That is possible, i don't even know how you could control that or any other variable , Buyers will generally shop around looking for the best deal, if thats not possible then they will pay the higher price if thats the home they want....I'm not sure how the market works in other provinces, but the Buyer is aware of how much the home sold for last...how much the land taxes are etc...if the buyer has any smarts they are not going to buy a home that sold for 500K then a months later is asking 580K...they are probably going to look for that contractor that is passing on some of those GST savings to the buyer like CDN fox suggested...

This is not the only PP plan to help build more homes...once again we should be asking what was any liberal policies in this regards, I'm not aware of very many... 

Of course it's possible, it will benefit those with the most money. We have seen it in BC where foreign speculators have bought multiple units and they sat empty. They get the GST break and the person who actually ends up buying the place to live in will end up paying tax. I'm not saying this is a bad idea, I think it could be good if done right, just that it seems like another PP ism that is just thrown out there with no indication that it has been properly thought through. He won't be able to get away with that if he is PM, he will be responsible for the consequences, good and bad.

[herbie]

Why does everyone keep talking as if the proposed GST break is for the seller? It is for the buyer of new homes under $1 Million.

There should be a temporary GST break on ALL construction materials to encourage the building of all new residences and renos that add rental units as well.

What he seller sells for is not affected by govt regulations only buy coops and low income programs that have the sale price in mind before they build. If you buy a new home for $1,000,001 you will pay $50,000 GST if you buy for %999,999 you pay NO GST. Save $50,001

But no seller is going to lower the price if the market rate is $1.1M because they don't give a shit about how broke you are, they want the extra $100K

[Aristides]

1 hour ago, herbie said:

Why does everyone keep talking as if the proposed GST break is for the seller? It is for the buyer of new homes under $1 Million.e is $1.1M because they don't give a shit about how broke you are, they want the extra $100K

It's for the original buyer whether they live in it or not, unless PP has a different plan. 

[CdnFox]

4 hours ago, herbie said:

Oh look, Herbie posted a picture of himself with a headache after trying to understand the fairly simple concept I laid out   

Did you want me to grab some crayons and explain it to you again buddy? I can go slower...

[August1991]

On 11/5/2024 at 11:52 AM, Aristides said:

I would be OK with it if it is just for first time buyers. Otherwise it is a reward for flippers.

Disagree.

I'm with Rearan

 

[CdnFox]

1 hour ago, herbie said:

Why does everyone keep talking as if the proposed GST break is for the seller? It is for the buyer of new homes under $1 Million.

Sigh 

Ok  i'll explain it again. 

so a buyer is going to spend the maximum amount of buyer is going to spend. That's how the market works right now. So until we have enough homes that we have a surplus it's going to be that way.

So whether there's GST in it or not doesn't make any difference to the buyer. If you add GST the price of the home will go down slightly but you will pay that corresponding difference in GST. If there is no GST then the price of the home will increase by that savings because now the homeowner can still afford to pay that higher rate because they're not paying GST

And that translates into mortgage rates. Because 90% of the people have to take a mortgage out for their home they discover they can pay let's say $2500 000 a month in mortgage payments and that's what they can pay, they can't pay any more and the market will push it right up to that limit. People will always tend to buy the nicest place they can afford

So the only person who actually benefits is the seller. Instead of the extra money going to the buyer, the extra money goes to the seller. Which makes it worth taking a risk to build that kind of housing because you know there's more profit in it. And because more of that kind of housing gets built it actually puts less pressure on housing prices so in the long run it's still beneficial to the buyers but only because it is inspiring the seller

Basically making it more easy for the seller to make money even if circumstances are a little different than he thought provided he builds the kind of housing that canada needs right now. It also forces them to look at opportunities where they can build the homes under that price only and ignore opportunities where the price would exceed a million dollars. In other words more condos and Townhomes and fewer luxury estates, more homes in the suburbs and other areas and less in the downtown core where land is too expensive

So you kind of see how that works right? In the end it does benefit the buyers but that's not who gets the initial benefit. It just makes it easier and more of a strong business case for developers to build the right kinds of homes and enough of them that it'll start to ease pressure on the market

[August1991]

The GST taxes rich people, when they spend - when they buy stuff.

The US under the Dems does not have a GST - a federal VAT

Edited November 9, 2024 by August1991

[CdnFox]

2 minutes ago, August1991 said:

The GST taxes rich people, when they spend - when they buy stuff.

The US under Trump does not have a GST - a federal VAT

You can always pay it in Kryptonite I hear