Over 200 REALTORS®, representing more than 100 real estate boards and associations from across Canada, visited their Members of Parliament on March 26 and 27 to discuss two key federal issues impacting the nation’s real estate industry.
The first REALTOR® proposal is to raise the maximum amount Canadians can withdraw from their RRSPs under the Home Buyers’ Plan from $20,000 to $25,000 per individual. The increase is needed to account for the 27 per cent increase in consumer price inflation since the plan was established in 1992.
“The lack of inflation adjustment is an obvious oversight in the design of the national Home Buyers’ Plan,” said Canadian Real Estate Association CEO Pierre Beauchamp. “The maximum loan limit under the Home Buyers’ Plan has been losing ground as a
percentage of rising average resale home prices for more than a decade. Plan users are being forced to
finance bigger mortgages, causing their debt burden to rise even as interest rates remain low.
“The Home Buyers’ Plan is a very successful federal program that has helped over 1.5-million first-time home buyers to purchase more than 790,000 homes over the past 15 years.
The plan also encourages Canadians to start retirement savings earlier, since owning a principal residence represents the foundation of an overall financial and retirement plan.
“The REALTOR® proposal addresses the lack of inflation adjustment, and would help ensure the Home Buyers’ Plan is better able to meet the needs of first-time home buyers,” added Beauchamp.
REALTORS® have also developed a
detailed proposal to encourage reinvestment in real property. The current capital gains regulations suppress the opportunity to reinvest in real property because investors are deterred by a lock-in effect. This means lost opportunities for Canadians.
The REALTOR® proposal would allow the deferral of capital gains tax and recaptured capital costs when an investment property is sold, and the proceeds of the sale are invested in another investment property within one year.
“REALTORS® have been calling on the federal government to make such changes to the capital gains tax for several years now. The proposal would provide several economic benefits, including a boost in Canada’s productivity, expansion of rental housing, and encouragement of urban regeneration.
“Small investors are holding onto their real property investments because of the tax consequences associated with selling and reinvesting, and this is unduly influencing typical market activity,” said Beauchamp.
“Despite our disappointment that capital gains were not addressed in the 2007 Federal Budget, CREA remains committed to working with the federal government to develop a policy that will encourage
investment in real property. These meetings with our elected officials are an important part of this process,” he added.
In addition to these issues, there was also time to
remind federal politicians of the significant impact MLS® sales have on the economy.
A March 2007 study, prepared by Altus Clayton for CREA, estimates that a total of $32,200 in ancillary spending was generated by the average housing transaction in Canada during the period between 2003 and 2005. Considering an average of 459,900 home sales were processed annually through MLS® during that period, this ancillary spending amounts to more than $14.8 billion per year across Canada.
Direct and indirect employment is significant from these house sales: 153,400 jobs are estimated to have been generated by the average annual MLS® resale housing activity. Approximately one-third of these jobs are in the finance, insurance and real estate sectors.
It was clear from the meetings held on Parliament Hill that MPs are gaining a better appreciation and understanding of just how important the real estate
industry is to the economic well-being of the country.
REALTORS® at all levels of organized real estate will continue to ensure MLS® remains the pre-eminent service it has become across the country and that certainly speaks to key attributes such as accuracy, completeness and uniformity of MLS® data.