Tax change on investment properties would spur development

Ottawa can create thousands of jobs, make advances in cutting greenhouse gases and give local communities far more control over their own development.

How? The Canadian Real Estate Association (CREA) is asking Ottawa to change capital gains tax policy to defer collecting the capital gains tax and capital cost allowance from investment properties when a property is sold and the profits are reinvested in real estate within a year.

“We want Ottawa to remove this deterrent to small investors in the next federal budget,” explains Andrew Peck, Vice President and General Manager, Royal Pacific Realty and member of the CREA’s Federal Affairs Committee.”

“This would result in properties becoming available that are now being kept off the market because property owners can’t afford to pay the tax owed.”

In 2006 about two-thirds of Canadians who reported real property gains had incomes of $50,000 or less. CREA has pointed out that companies with five or more employees now have these tax benefits. It is only small investors that are taxed.

Ottawa collects about $415 million from these taxes each year, explains Peck.

“If small investors are given a tax break, this could be the economic stimulus we need, since property owners will use the funds to renovate and improve their buildings.”

Peck believes this is a green solution with so many benefits for the community.

“Property owners will retrofit their buildings, making them more energy efficient. They will then rent them to families who might otherwise have had to commute long distances. This will enable valuable workers to stay in our communities and it will create jobs.”

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