How can Housing help improve Canadian Productivity? This is a question that many ask. If our taxes rules on investment properties would change we as a country would be much more competitive in the world market. We have many clients from all over the world that has purchased Real Estate here in Victoria as an investment.
Let’s have a look at what could happen if the tax rules would change a bit.As REALTORS® we lobby local and federal governments through our different associations. One is BCREA which is British Columbia Real Estate Association and CREA or Canadian Real Estate Association.
The Canadian Real Estate Association has told the Standing Committee on Finance that a change in tax rules to allow for investment in real rental properties would help improve Canada’s international competitiveness. “The Minister has spoken about a pro-growth strategy. He has talked about liberating the forces of investment as a key to economic competitiveness. Our proposal is a natural component of such a strategy. CREA CEO Pierre Beauchamp explained in his presentation to the Committee on October 18th. “It has the potential to help revitalize our communities and contribute to wider economic prosperity. The specific CREA proposal presented to the Standing Committee involves the deferral of capital gains tax when an investment property is sold and the proceeds of the sale are reinvested in another property within one year.“Households can move their furniture and belongings, including their stocks and bonds – but not their real estate investments without substantial tax consequences Pierre Beauchamp added.
The CREA CEO said Canada is not leveraging its wealth to maintain its capital advantage. “Our proposal responds to those issues. Reinvestment in income property is an effective means to leverage some of this wealth to provide the quality environments that are required to sustain economic prosperity.
The CREA CEO told the Committee members that the only major criticism of the rollover concept has focused on the potential losses the federal treasury may report because of deferred tax revenues. “But please note – this is a deferral and not foregone revenue, Mr. Beauchamp added.
In making the annual pre-budget submission to the Finance Committee, CREA also called for an adjustment to the successful Home Buyers Plan to reflect market realities. “We are asking this Committee to recommend a maximum loan amount be raised from $20,000 to $25,000 to account for inflation, Pierre Beauchamp said. “These limits were set back in 1992 and should be adjusted every five years, he added.
According to CREA statistics, the Home Buyers Plan has helped more than 1.5 million Canadians finance the down payment for a first home since it was created in 1992.
The Submission to the House of Commons Standing Committee on Finance can reviewed here.
If you have any comments on the above please drop a note below. Further feel free to contact us any time.
Anders Treiberg, Associate Broker, REALTOR®
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