Canadian house buyers will be able to write off some mortgage interest and property taxes against their taxable income this year for the first time, Finance Minister John Corsbie said here Wednesday.
Unlike U.S. residents, who have long enjoyed the tax deduction, Canadians have never been permitted this write-off. But unlike U.S. homeowners, who face a capital gains tax on disposal of their homes unless the funds are rolled over into another property, a Canadian pays no gains tax on the profit from the sale of a principal residence.
Crosbie said at the National Economic Conference that his fall budget will provide for the deductions, one of the more prominent campaign promises of the Progressive Conservative Party in this year's federal election.
But taxpayers won't be able to write these costs off completely. And at least not next year.
Crosbie said in an interview that because of the revenue loss involved and the size of the federal deficit, it would not be possible to implement the deduction plan all at once. It must be adopted in stages but Crosbie gave no indication of what the initial tax benefit will be.
He will provide additional information in about two weeks when forms for the tax scheme are printed, he said.
Crosbie's statement ends speculation about whether the program would be implemented but raises questions about how much will be permitted to be deducted initially and at what rate the program will be phased in.
The write-off plan is credited as being the plank in the Conservative platform and helped the party most in defeating the liberals to form the government.
Conflicting estimates of what the scheme will cost the country's treasury raised doubts about the program from the beginning. Some critics objected to the plan, saying it helps the "fat cats of society" -- the present homeowner. But it does nothing for the renter or low-income person wanting to buy a home.