Calls for tax breaks for seniors looking to downsize their home

Many Canadian seniors would like to move into smaller, easier-to-manage homes, but right now it often doesn’t make financial sense. A recent report says these older homeowners are hit with a pile of taxes when they downsize—including GST, provincial sales taxes, and land transfer taxes in some provinces. These extra costs make moving into a simpler place feel like a bad deal.

The main idea from housing experts is simple: if we give seniors a tax break, more of them might choose to move. That would free up big family houses for younger buyers and help ease Canada’s tight housing supply. Right now, a new GST rebate exists only for first-time homebuyers, but many are calling to expand it to include any owner-occupied home purchase—even for seniors.

Seniors still buying a new condo, for example, can face up to a 13 per cent added cost just in tax. That’s a serious chunk of extra money that many find hard to justify. Even when the smaller home might make daily life easier, the math doesn’t add up once you stack the taxes on top of the moving costs.

One real-life example helps bring it into focus. A real estate agent shared how her own parents—now in their mid-80s—live in a four-bedroom house they built decades ago. As things have changed—her mother’s dementia progressing and home adaptations needed—the pair could benefit from downsizing. But the costs of taxes and moving mean it simply isn’t worth it for them unless the math changes.

Economists also point out that in Ontario alone, there are an estimated 4.4 million empty rooms in homes owned by seniors who aren’t moving. That’s roughly equivalent to two decades’ worth of housing construction, sitting unused. If tax incentives encouraged downsizing, it could free up real, needed space for families and relieve pressure on the market.

Right now, the federal government says the existing GST rebate is meant only for first-time buyers—not for people who already own a home. That leaves seniors stuck without a way to reduce their tax burden when moving. Advocates are calling for a change to that rule—arguing that seniors who have paid taxes their whole lives deserve a break that makes downsizing possible.