Capital gains taxes on your primary residence stops older people (who have large unrealized gains in the home they own) from selling their large, built-to-accommodate-a-family house to buy something smaller in a more convenient location. They’re not able to buy something in the same price bracket after selling, because of capital gains taxes. So old people stay in their large homes and younger people, who would actually need that larger house, can’t get into the market.
I would think dropping capital gains taxes on your primary residence, and have a property tax that scales with the market value of your home, would make the housing market more efficient.
It makes it more efficient by allowing the price to go more towards the natural price, which is high due to lack of inventory.
It keeps prices suppressed in the USA for exactly the reason you say -- old people won't sell their high end homes, which keeps the median price lower.
But then many provinces go and pursue policies like allowing seniors to defer property taxes until death, which if anything incentivizes them to stay in place.
No, they were referring to the capital gains exemption, which is only allowed every two years.
Actually, you pay full cap gains on a 1031 exchange because it can't be your primary residence. You pay gains on the difference in value during the exchange, and if you sell it down the line you pay gains on the full difference (minus your improvements).
I would think dropping capital gains taxes on your primary residence, and have a property tax that scales with the market value of your home, would make the housing market more efficient.