While Toronto's housing market may be a little too pricey for the typical "house flip," the nature of our market generally dictates that if you are able to purchase anything and just sit on it, it will increase in value, sometimes rapidly.

This is a boon for investors, who now own more than 56 per cent of the city's new condos (as buying pre-construction almost always guarantees a profit), and for those with a lot of capital: StatCan says that 31 per cent of homes in Ontario are held by people who own multiple properties, while 51.8 per cent of all real estate wealth belongs to for-profit businesses.

These are the grounds for a new gentrification tax being proposed by community organizations who feel that something needs to be in place to "stop homesellers from removing wealth from the communities that produced it," and also keep space for low-income residents who inevitably become displaced in gentrification.

Most Canadians can't afford these 600 sq. ft. shoeboxes.

— jballem🇨🇦 (@jballem) October 24, 2023

The Parkdale Neighbourhood Land Trust and Gentrification Tax Action are among the groups at the forefront of the push for the levy, arguing that profits turned on the sale of a house are often unearned, coming from values that homeowners — be they individuals or corporations — did not produce themselves.

This is especially pertinent in the case of quick sales with high profits, which is why the suggested tax would decrease the longer a person remains a local resident, ranging from seven to 23 per cent.

"The tax rate would be higher for short term ownership; the shorter a period you own the home, the more likely your motivation was partly speculative, and the more you should contribute to the community in the form of a gentrification tax," James Partanen at Gentrification Tax Action tells blogTO.

"The longer you've been part of the community, the more you've contributed to the value of the community, and thus the smaller portion of your realized capital gain you should have to contribute."

Another key aspect of the fee is the fact that the funds would go directly back into the neighbourhood from whence it came — in particular, to address affordable housing issues in the area.

📚 What effect has gentrification had on tenants in the Parkdale neighbourhood of Toronto?

Learn from this study by @parkdaleland, supported by the Centre’s Community-Based Tenant Initiative Fund:https://t.co/qd7AsvheuS pic.twitter.com/YmnwaZPpuC

— The Centre | Le Centre (@Cntr_support) November 28, 2022

In Parkdale-High Park, such a tax could have garnered a whopping $67 million from homes sold last year alone, which Partanen says is enough to create nearly 100 new affordable units in the neighbourhood.

Gentrification Tax Action estimates that such a tax could bring in upwards of $2 billion a year if implemented city-wide, and would help curb the commodification of the market amid our housing crisis (or at least force those who treat housing as an investment rather than a necessity pay more for it).

There are, of course, those individuals who are able to scrounge just enough money to afford a down payment and secure a mortgage for a single place of their own who would inevitably be more impacted by such a tax than a company or investor with more money, though only if and when they go to sell.

There is also the value an owner invests out-of-pocket in the form of renovations that rightfully increase the value of a given home.

I’ll never own a home and it’s one of the most depressing experiences I’ve ever felt

— Johnny K (@john_kalo) December 15, 2023

Some online feel that Toronto simply needs to make better use of existing levies rather than adding new ones — which is what the City is already planning to do by increasing land transfer taxes on the priciest of homes.

Architects Against Housing Alienation is another group that has been huge in advocating for a gentrification tax across Canada, while municipal political party OneCity Vancouver has urged for a "windfall tax" specially for areas where values spiked quickly due to new transit projects or upzoning.