BRIEF FROM THE LONDON AND
ST. THOMAS ASSOCIATION OF REALTORS
The London and St. Thomas Association of REALTORS® would greatly
appreciate your support for two initiatives, which we believe would both
stimulate the economy and be of great benefit to Canadians, now and in years to
come. Since the government is currently in the process of arriving at a budget,
this seems an opportune time to ask for your assistance, and that of your
colleagues in the London CMA.
The first initiative we would like to advance is the indexing of
the Home Buyers Plan to CPI. As you are aware, this program has allowed over
two million Canadians to save for both retirement and a home without needing to
prioritize one over the other. Indeed, in 2009, more than 46,000 homes were purchased
using the HBP, resulting in over $1.9 billion in spin-off spending and more
than 16,000 jobs.
However, over the existence of the HBP – close to two decades now
-- the average house price in Canada has almost doubled. In the London CMA
alone we have gone from an average price of $137,252 in 1992 to an average
price of $233,388, Year to Date as of July 31, 2011. Budget 2009 wisely
recognized the need to adjust the Plan for inflation and raised the limit by $5,000,
the first increase since 1992. That was great, but more is needed if the HBP is
going to continue to help Canadians buy homes.
We recognize that the government is determined to get Canada’s
fiscal house in order and that, in order to do that, it will not entertain any
measures that don’t result in a net gain. We also know that the government
projects a balanced budget for the year 2015. Mindful of these two
considerations, we ask that, beginning in 2015 and using Budget 2009 as a
starting point, the government consider adjusting the limit by $2,500 in 2015
at a cost of $7.5 million, with a further $2,500 increase in 2020.
Of course, if the government should be inclined to commence
indexation earlier or to extend the HBP so that it benefited move-up buyers as
well as first-time buyers, we would have no objections.
Our second request is that the government allow the deferral of
previously written off depreciation (Capital Cost Allowance) on an investment
property when owners sell in order to reinvest. We know from our conversations
with you that you have some issues with this initiative vis-à-vis net loss vs. gain and
the potential for abuse by larger investors. Notwithstanding this, we strongly
believe that allowing this deferral would remove a major reinvestment obstacle
for over half of those individuals who stand to benefit from such a change –
those whose incomes are below $50,000. Real estate developers get tax
advantages unavailable to small real estate investors, including the ability to
defer tax, and a much lower tax rate, depending on their type of business. And,
as you know, investment in property always triggers renovations, retrofits and
redevelopment, which accelerates the economy, greens the environment, and
revitalizes communities. The average property investment generates $287,850 in
economic spin-off activity. In addition, more than one job is created for every
two investments. Also to be taken into consideration is the other revenue which
would be generated by more reinvestment activity, including Capital Gains Tax
from property sales, and GST/HST and income tax from spin-off activity. And, of
course, all deferred tax is ultimately collected when investors decide not to
reinvest or later, through their estates.