As housing affordability continues to strain families across Canada, economists and advocates are calling on the federal and provincial governments to help seniors downsize by offering tax breaks—an incentive they argue could open up much-needed housing supply for younger generations.
The push is being led by the Ottawa-based Missing Middle Initiative, which released a report this month emphasizing how financial barriers are preventing many older Canadians from moving into smaller, more suitable homes. “If a senior wants to downsize and move into a new condo, in Ontario for example, they’re assessed GST and PST,” said Mike Moffatt, the initiative’s director and a respected economist. In cities like Toronto, downsizing can also trigger both provincial and municipal land transfer taxes.
This, Moffatt argues, creates a disincentive for seniors to relocate, even when their current home no longer meets their needs. While the federal government recently eliminated GST on new homes under $1 million for first-time buyers, Moffatt and others believe the benefit should be extended to all purchasers of owner-occupied homes—including seniors.
“If that happened, it would shave up to 13 per cent off the cost of new homes,” Moffatt said, suggesting it could make a meaningful difference for older homeowners weighing the cost of moving.
When asked if it would consider extending the GST rebate, the Department of Finance responded that the current policy is aimed specifically at helping first-time homebuyers get into the market—not existing homeowners.
For seniors like Effie Panagiotopoulos’ parents, the numbers simply don’t add up. In their mid-80s, they still live in the two-storey, four-bedroom home they built in Toronto in 1988. While the couple would benefit from a bungalow that’s easier to navigate, the costs involved in downsizing make the move unrealistic.
“It doesn’t add up—pay all those expenses to move from a two-story to a bungalow,” Panagiotopoulos, a real estate agent specializing in senior downsizing, told CTV News. “Do they leave the city? Leave family and friends?”
The financial calculation becomes even more complicated with health concerns. Her mother, Anna, now 85, was diagnosed with dementia five years ago, prompting the family to retrofit their home with a stair lift and other medical accommodations. For them—and for many seniors—downsizing isn’t just a lifestyle choice. It’s an economic puzzle that increasingly feels like a trap.
Panagiotopoulos sees this dilemma regularly with her clients. “They want to make a move. Many times, they need to make a move,” she said. “But they’re looking at all the costs involved, and it simply isn’t worth it for them. They’ve paid taxes their whole life—they need a break.”
The Canadian Centre for Economic Analysis estimates that Ontario alone has 4.4 million empty rooms—many of them in homes occupied by seniors and empty nesters who either won’t or can’t afford to relocate.
Moffatt believes that helping seniors unlock those homes through targeted tax relief would create a win-win for the housing market. “One way to help first-time homebuyers is to help seniors downsize,” he said. “When a senior moves out of a suburban home, it frees up that space for the next generation of families and helps ease the overall housing crunch.”