Capital gains tax policy impacts how and where real estate investors choose to grow their portfolios. While Prime Minister Carney has cancelled the proposed Capital Gains Tax increase, many investors are interested in the future of Canadian policy in this area.
In Canada, any property that isn’t your primary residence is subject to capital gains tax applicable to half of the profit when it’s sold. In contrast, U.S. investors follow a rule known as the 1031 exchange, which allows them to delay paying capital gains taxes if they reinvest the proceeds into another similar property.
Conservative Leader Pierre Poilievre has signalled that he is considering implementing a similar rule.
What’s Being Proposed?
As part of his election platform, Poilievre has introduced a concept called the Canada First Reinvestment Tax Cut, which would allow individuals and businesses to defer capital gains taxes if they roll the proceeds into Canadian-based investments—either real estate or active businesses. Taxes would be payable when the investor ultimately cashes out or moves the capital out of the country.
The concept differs from the U.S. model in that it is not limited to real estate transactions or require a “like-kind” property exchange.
The program is proposed to run for a limited window, starting July 1, 2025, and ending December 31, 2026.
How the Program Would Work
Take this example: Let’s say an investor sells a small multifamily property for $950,000, with $180,000 in capital gains. Currently, nearly $45,000 could be owed in taxes. But under the proposed plan, during the July 1, 2025, to December 31, 2026 period, that money could instead be reinvested into a mid-sized mixed-use building or a growing Canadian business, deferring the tax.
Investors could use this program to leverage purchasing power and greater liquidity after a sale, which could help with scaling real estate holdings.
How the Program Differs from the U.S. 1031 Exchange
Although Poilievre’s proposal and the US 1031 exchange both focus on capital gains tax deferrals, there are differences. While the 1031 exchange focuses strictly on real estate and has detailed rules around property type and timing, Poilievre’s version, as it is proposed now, appears more flexible. There’s no requirement for the reinvestment to be in a “like” asset, and the timeline isn’t tied to short windows like 45 or 180 days.
A Tool for Growth—But Not Without Questions
Though the proposal is attracting attention, it’s still early. Details around eligible asset types, reporting requirements, and what qualifies as an “active” Canadian business are expected closer to the rollout date—if the policy is enacted at all.
Still, savvy investors should be watching closely. This kind of policy could reshape tax planning strategies for those holding income properties, vacation rentals, or commercial buildings.
It also has the potential to help investors reposition their portfolios without being penalized for making smart, growth-oriented decisions.
Looking Ahead
Whether or not this proposal becomes law, it signals something important: policymakers are finally acknowledging the need to keep Canadian capital working inside our borders. For real estate investors, a tax deferral option like this could unlock new levels of opportunity—especially in a high-rate environment where liquidity and flexibility are key.
As always, if you’re considering selling an asset or planning a major reinvestment, now is the time to speak with a tax advisor or real estate financing expert. The rules may be changing, and being ready ahead of time could put you in the perfect position to benefit.
Dion Beg is the Founder of Kanga Mortgage – a team that helps brand new and veteran investors with reaching their financial goals. Dion’s career started in Australia—hence the name ‘Kanga.’ Over the past two decades, Dion’s team has helped thousands of Canadian investors acquire over $1 Billion in real estate. A multiple-time recipient of the Consumer Choice Award, Dion has also consistently ranked among the Top 75 Mortgage Brokers in Canada. In addition to leading his team, Dion frequently speaks at the Toronto Regional Real Estate Board (TRREB) and the Ontario Real Estate Association (OREA).
