Canada: A Land Of House-Rich Millionaires

Canada: A Land of House Rich MillionairesWe are a cocky lot in Canada about our wealth with millionaires apparently abounding everywhere. Our confidence probably got another boost with a report from the Deloitte Center for Financial Services saying there were 1,745,000 households in Canada with more than $1-million in assets in 2011.

Not bad, but should some of these people really think of themselves as millionaires when an inordinate amount of their wealth is concentrated in an asset they have little intention of selling? Even among the top 1% of millionaire Canadian households, the Deloitte study found 21% of their wealth was tied up in their home.

It’s not surprising that so much of Canadians’ wealth is tied up in our homes. After all, we in Canada do not pay capital gains tax on our personal residences, and this makes our homes the first and best investment that we should make, and a very important part of our retirement nest egg. Far from apologizing for having much of our wealth concentrated in our homes, we should be pleased (if not cocky) that our system is encouraging savings in a vehicle that is almost guaranteed to appreciate in the long term, though there will of course be short term ups & downs.