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Taxing capital gains with higher inclusion would barley move the needle It would also punish the 99% not the 1% who would simply hold their shares and choose not to pay. The 99% who need the capital gains to finance regular purchases would be most hurt by this. With regard to the taxation of primary residence it has been bantered around and it makes sense because let’s face it. That’s where the money is. Look you have a PM that has never kept a budget and is a trust fund kid. He has no sense of the arc of history. Pandemics can last years. It’s almost a guarantee the government will print more money in 2021 than 2020. And guess what. Sh*t happens that we cannot anticipate that’s why wise people save when times are good like 2015 to 2019 rather than run deficits that will “balance themselves “ If you don’t develop palpitations everytime he emerges from his bunker to unleash money from every orfice then you are not understanding the consequences. When he says the government has your back he means you and me are gonna pay for it

That comment made my day :-) I am actually thinking of doing the opposite. Gotta love how smart people can look at the exact same situation and see two completely different solutions / ways forward. No right or wrong. The key is fit. Finding a solution that works for you. Best of luck! you are thinking of exiting real estate (in Vancouver?) and entering the stock market? i’m definitely not smart financially. thx to this board (all the contributors and educators and the administrator Sanjeev of course) — i have had some fun while keeping my capital and some :)) gary, I have learned over the years that I am smart as a stump when it comes to real estate. Dumb luck explains my current situation. When I bought my current residence in Langley (2010) I paid about $600,000 and thought the market might be in a bubble. My mortgage was a little under $400,000 so my starting equity was $200,000. This spring my house might sell for $1,300,000 (perhaps more). My mortgage is under $330,000. With closing costs, costs to break my mortgage and moving costs if I sold this spring I think i might net about $900,000. I started with $200,000 so this would be a $700,000 tax free gain in 11 years (no taxes on principal residence in Canada). Locking in $700,000 real estate gain (tax free) appeals to me. Adding $900,000 to our existing investment portfolio my wife and I will be set up very well financially. If I can earn 6-8% on the total portfolio (my long term average is a shade under 15%) we will be set financially. Another smaller factor is our current house will need some improvements in the coming years. If we stay my guess is we will spend about $70,000 in improvements in the next 5 years (new windows, garage door and motor, plumbing upgrades, new powder room, new kids bathroom, new kitchen etc). We have a nice house... but it will need some work :-) The second part of the equation is lifestyle. Where we live today is a great area to bring up kids: quiet street, great schools (all walking distance), parks, bike trails, newer rec center, shopping close, great sports programs and sports facilities. Great suburban living (50 minutes from downtown Vancouver). Except our 3 kids will all likely be in same University (UBC, on the other side of town) in Sept. My wife and i will be entering the next phase of life (no kids at home; no kids sports activities to keep us busy in the evenings etc). We are thinking it might be great to live in the fun part of Vancouver (close to UBC) for the next couple of years: rent a house ($4,500/month, perhaps more). And be closer to the kids (at school) and spend the next couple of years exploring and getting know the fun parts of urban Vancouver (beautiful city). Actually, this is more what I am thinking; I just broached the idea with my wife and she needs some time to wrap her head around it :-) We have talked about it for the past 6 months or so but I decided it was time to kick it up a notch when I saw what recent sales were going for in my area. We are in no hurry. Historically we have moved every 5 years or so; 11 years in one place is a record for us. The goal is two fold: 1.) improve our lifestyle 2.) lock in / perhaps improve our financial situation No firm decision :-) When we have made moves like this in the past, it normally takes us about 12-18 months for the decision to come into focus. Every move we have made has been a great decision (looked at with hindsight). If we stay I will be happy. Are you considering the possibility that capital gains on the house may be taxed with the next budget? That’s putting some hurry into these decisions for people Somehow “the government has your back” will need to soon give way to the reality of tax increases

“The reality is most people heard Buffett dismiss it and others call it tulips - and that is enough to stop thinking.“ Buffett dismissing bitcoin reminds me of Einstein dismissing quantum mechanics

This will also potentially have a devastating effect on retirement plans

But then why doesn’t everyone just do this with Switzerland. A country with zero capital gains tax ? What you say is not correct. It's not true that Switzerland has a zero capital gains tax. What's true is that Switzerland doesn't have a capital gains tax. The reason why Switzerland doesn't have a capital gains tax is because capital gains have a 100% inclusion rate and are taxed as ordinary income. In addition Switzerland levies a wealth tax on your net assets. Thanks for clarifying I guess not to leave the main point I’m just trying to understand the issue of “flight of capital “. In other words why do we have to keep our capital gains policy similar to US and if capital can easily flee then any other country with low capital gains taxes would just reap the benefits even if US and Canada both raised rates. Just trying to understand these issues from those here that are more knowledgeable

But then why doesn’t everyone just do this with Switzerland. A country with zero capital gains tax ?

Wabuffo excuse my ignorance but I hear this argument often and don’t totally understand it How easily can we really move capital to US markets from Canada ? What is the mechanism? As a Canadian I don’t see how I can simply start investing in US equity and get the lower capital gain tax unless you mean people with capital are just going to leave Canada and become US citizens to get the lower capital gains tax ? I suppose that is the obvious mechanism for the flight of capital argument Thanks

This is more a question for my Canadian friends as the tax situation in US tends to be less severe or at least it can be more difficult to raise taxes across the board The post Covid world may see 1) capital gains inclusion go way up. 75 to 100% 2) principal resident exception on home possibly go away Wondering how some of you are approaching this issues especially with regard to large capital gains you may have in stocks held for many years? I see financial advisors telling people to trigger gains now before it’s too late but killing the compounding machine also has its drawbacks? So far I have stayed with benign neglect of the portfolio but wondering if I am a sitting duck especially with some of the large capital gains made over last 10 years Thanks

I think if we are honest with ourselves we would admit that these political discussions are eroding the online friendships and civility that are required on an investment board to allow people to debate investment ideas and to disagree with the idea but not the person - and not belittle the person expressing the idea. That becomes hard to do when you are attacking each other’s politic views over on the politics section. It’s perhaps a microcosm of America but in a very small way it can start the process of destroying what was built here and that needs to be taken seriously

https://www.institutionalinvestor.com/article/b1n5nhk92q3g62/I-Can-t-Believe-I-m-Saying-This-But-I-m-Passing-on-Seth-Klarman If value investing is merely being poorly practiced by some poor practitioners someone better tell this guy called Seth Klarman that he is just a poor practitioner of the art

Agree. That is a good encapsulated summary of what happened. But to the investors that purchased the equity what was supposed to happen was that the cash burn would be stopped by quickly closing and selling poorly performing stores. The famous line by Bruce Berkowitz one of the value investors involved at the time was that sears losses were optional. It’s easy in retrospect to summarize what happened here as obvious but this gets to the heart of a common value thesis that there is safety in the assets and that assets like real estate that have knowable market values and are fungible need to be given greater weight than unknowable cash flows at year 6 etc. These assets were not safe because in essence they belonged to society NOT to the investors. The concept of multiple stake holders makes it impossible to liquidate large assets and shut down large poorly operating businesses. This is just one of the perhaps many lessons new age value investors need to learn to avoid the value traps that lead to these brutal results

Agree. And one way to think about this is that the market has become more efficient and hence value investing does not work because you get what you pay for whereas in the past you could more easily find valuable assets that were simply being ignored but in the last 15 years these assets that seemed just out of favour were being properly valued in the market. It was the value investor that was missing the boat and falling into a value trap without knowing it.

Now there was hypothetical value in asset, but it could not be converted to cash. If you can not take out cash then investment will not work. Yes but WHY can you not convert this to cash. The thesis for all the value guys in sears wasn’t based on the operating business. It was based on the assets

I don’t know if one can have a proper discussion about this issue without drilling down to specific investments Otherwise we are just speaking in generalities and it’s not useful. So too answer does value investing work we should break down the companies he invested in that lead to the 1.5% returns over 15 years...... Why did sears not work ?? Massive Real estate assets But poor operating business..... but isn’t this the typical value investment playbook. The concept that assets are safer than operations is a critical value investment concept. Throwing out this idea is just admitting that value investing does NOT work. So why did sears not turn out to be a great investment? I think if you can do a post mortem on Sears you can answer the question One issue that will come up is are you really the owner as a equity investor in the same way you were 30 years ago. The concept of stakeholders is stronger now than it was 30 years ago. You can’t go in and wack management and close down all these sears stores overnight. You would be attacked by politicians and the media and brought before Congress. So this is just one issue that has changed. You are no longer the “owner “ in the same way you were 30 years ago. I think there are more lessons to be learned in such an exercise and if done well we may discover that at least in the way it was practiced by Ben Graham and early Warren Buffett value investing does not work - maybe

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