The federal government has proposed a significant reduction in withholding tax rates on property transactions for tax filers as part of efforts to revive activity in the real estate and construction sectors.

Under the proposal, the withholding tax on property purchases for filers has been reduced from 2.5% to 1.25%, while the tax on property sales has been lowered from 5.5% to 2.75%.

Officials said the construction sector plays a key role in economic activity and employment generation, with strong linkages to industries such as cement, steel, paint, tiles, timber, hardware, and transport.

The government stated that the reduction is intended to make transaction costs more reasonable and support a sector that has been under pressure due to high input costs and slowing demand.

The relief is expected to benefit documented transactions, as the reduced rates apply specifically to filers, potentially encouraging greater participation in the formal property market.

However, analysts note that the overall impact will depend on broader economic conditions, provincial taxation structures, and whether lower federal withholding rates are sufficient to revive construction sector momentum.