Pierre's Canadian 1031 Exchange

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With the election just 3 days away, we thought we'd cover the most impactful policy proposal. This would send shockwaves through our industry.

April 25, 2025

Read Time: 3 minutes

Polls suggest a Liberal win. But after watching recent U.S. elections—and our own polling surprises—nobody in the investment world is treating that as a certainty. So while nothing is final, it’s worth understanding one of Pierre Poilievre’s most significant, yet under-covered, proposal:

The “Canada First Reinvestment Tax Cut” — a temporary capital-gains rollover that would allow anyone who sells a business, a stock portfolio, or a building to defer tax if they reinvest the full proceeds in an active Canadian asset by December 31, 2026.

In effect, it’s a Canadian spin on the U.S. 1031 exchange - but broader, and significantly more disruptive.

If this moves forward—it would reshape seller psychology, investment timelines, and pricing for multifamily across Ontario. So regardless of the outcome, it’s worth exploring now.

Let's dive in.

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How it differs from the U.S. 1031 exchange

While Poilievre’s “Canada First Reinvestment Tax Cut” draws inspiration from the U.S. 1031 exchange, the structure is broader and more flexible:

Source: Conservative Party release; IRS guidance on 1031 exchanges.

What The 1031 Exchange Teaches Us

Roughly 30 % of all U.S. commercial real-estate trades involved a 1031 exchange between 1997 and 2005.

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Exchange buyers, facing a deadline, paid 15 – 35 % premiums for suitable assets.

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Owners who used the rule reduced average hold periods by about one year, accelerating capital rotation.

These data points provide a reasonable lens through which to view the Canadian proposal.

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Likely effects on Ontario multifamily (2025–2026 window)

Transaction activity

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Expect 25 – 40 % more trades province-wide as long-term holders unlock tax-free equity and private-capital buyers recycle proceeds from stock portfolios or business sales.

Pricing

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Bid competition usually lifts values beyond the pure tax benefit. A 3 – 5 % price firming on conventional walk-ups is realistic; scarce elevator product may see a wider premium.

Hold periods & strategy

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The “tax-lock” that encourages 10+ year holds weakens. Value-add specialists can exit earlier, redeploy gains, and specialize further.

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Portfolio reshuffling should increase demand for larger, management-efficient assets while releasing smaller buildings to the market.

Capital structure

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Deferral preserves equity, reducing average leverage. Anticipate LTVs trending down.

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Professional considerations for owners, sellers, and buyers

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Model two scenarios now. Compare today’s net-after-tax sale with a deferred sale at a modestly higher price during the rollover window.

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Prepare a reinvestment thesis. CRA will almost certainly require documentation tracing the full proceeds into a qualifying Canadian asset. Have the target identified before listing.

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Watch administration details. Ottawa may narrow what counts as an “active” Canadian business or require escrow mechanics similar to U.S. Qualified Intermediaries.

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Foreign disposals need care. Selling U.S. property or shares still triggers U.S. tax; mismatched foreign-tax credits could erode part of the benefit. (Jamie Golombek, CIBC).

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Closing Thoughts

If enacted, this policy would mark the biggest behavioural jolt to Canada’s multifamily market since CMHC introduced MLI Select.

Liquidity would rise; hold periods would shorten; and capital would migrate to its most productive use.

Bottom line: this is hypothetical for now. But whether the Liberals or Conservatives win on Monday, property owners have a lot to think about. Give our team a call today to chat through your strategy (647-915-3193).

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