“The duplex is our life savings”: at the dawn of retirement, their pension fund drops by $8,000 due to the federal budget

A couple nearing retirement are victims of the new federal capital gains tax. His savings are not in a pension fund, but in a duplex which has just been reduced by $8,000 in resale value.

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Update: A first version of this text indicated that the profits from the sale would be reduced by $28,000. However, as each member of the couple is entitled to a $250,000 capital gain in the case of Roch and Rose, as well as in the case of all couples in the same situation, they will have to pay $8,000 more in federal tax. during the sale, and not a maximum of $28,000 as we wrote Thursday morning.

“We are penalized for having chosen this retirement model,” says Roch, 65, owner in the Ahuntsic district of Montreal.

With his wife Rose, 63, they bought the building – two 4 1⁄2s – in 1990 for $140,000. They could easily list it at $750,000 today.

photo julien mcevoy

If they sell it before June 25, they will make $8,000 more in profits than after the new capital gains inclusion rate comes into force, a tax expert calculates.

“If the gain is more than $250,000, it can cost a maximum of $8,000 in additional tax per $100,000 of profits,” summarizes Stéphanie Roy, partner at Raymond Chabot Grant Thornton.

The $610,000 in profits that Roch and his wife would receive from the sale of the duplex could therefore be reduced by $8,000 to tax profits.

The ex-computer scientist with no pension fund finds it unfair. Why him and not those whose retirement is paid by the government, he asks?

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Not just the rich

“What will it be like in the next budget? There are no limits,” he said, referring to his recent property tax increase of $647.

Rose still works in administration and earns $40,000 per year. Roch receives his federal and provincial pension, less than $20,000.

“We are not rich. The duplex is our life savings,” says the father of three.

If Roch manages to keep his calm, this is not the case for a small landlady from Sainte-Thérèse with whom The newspaper spoke. She also prefers not to be identified.

“I didn’t sleep all night because I was so upset after seeing the federal budget,” she confided. I am disabled, my building was my pension fund. I wanted to get rid of it in just five years, but now I’m wondering if I shouldn’t do it as quickly as possible.”

Small owners suffer

It is difficult to explain the Trudeau government’s decision within the real estate owners’ lobby.

“It’s not true that it only affects the rich. In Quebec, three-quarters of owners have a plex, then they have a job on the side,” said the president of the Corporation of Real Estate Owners of Quebec, Éric Sansoucy, in an interview.

“They work for a large part of their lives to make it to the end and have something for retirement. There, the government comes to take away a significant slice of the fruit of their work,” he lamented.

The new measure will even increase rents, fears Mr. Sansoucy. “It will reduce the attractiveness of long-term detention,” he argued. When there is a new owner, there is generally an increase in rent prices, which should be avoided in the current context.”

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