The Toronto Real Estate Board Supports Increase to RRSP Home Buyers’ Plan Limit
November 16, 2006 — In support of the Canadian Real Estate Association’s federal lobbying efforts, the Toronto Real Estate Board recently made a presentation to the Federal House of Commons Finance Committee. The Committee was in Toronto gathering input for the next federal budget, and the Canadian Real Estate Association requested that local boards meet with the Committee.
The Toronto Real Estate Board’s input focused on the three issues that the Canadian Real Estate Association has made a priority for real estate agents at the federal level:
A proposal to allow the deferral of capital gains tax on the sale of properties;
Continuation of federal funding for the Residential Rehabilitation Assistance Program; and, increasing the maximum individuals are allowed to borrow from their RRSP to use as a downpayment for a home.
Capital Gains Tax Deferral
The Canadian Real Estate Association is proactively lobbying to convince the federal government to allow the deferral of capital gains tax on investment properties. Under the Canadian Real Estate Association’s proposal, capital gains tax would be deferred when an investment property is sold and the proceeds of the sale are reinvested in another property within one year. The deferred taxes would eventually be paid when the investment property is sold and the proceeds are not reinvested.
On behalf of the Canadian Real Estate Association, the Toronto Real Estate Board informed the federal Finance Committee that this proposal would create significant economic spin-offs by facilitating the sale of properties that might otherwise not be sold because of the tax implications. According to the Canadian Real Estate Association’s research, each housing transaction generates close to $25,000 in economic spin-offs for the economy, such as renovations, or the purchase of appliances and furniture.
Residential Rehabilitation Assistance Program
The Residential Rehabilitation Assistance Program is a federal program that provides funding to low-income individuals whose properties may be in need of significant repairs to make them safe and livable. This program also provides funding for the creation of secondary suites (eg. basement apartments) and to retrofit homes for disable persons. The Canadian Real Estate Association has informed MPs that this program will become increasingly important as Canada’s housing stock continues to age. The current federal funding for this program ends in March 2007, and the Toronto Real Estate Board asked the Finance Committee, on the Canadian Real Estate Association’s behalf, to extend funding to 2010.
Under the Homebuyers’ Plan, individuals are currently allowed to borrow up to $20,000 from their RRSP to put towards the downpayment on the purchase of a home. Taxes are not payable, as long as the withdrawal is paid back within 15 years. The maximum allowable loan has not been adjusted since the program’s inception in 1992. According to the Canadian Real Estate Association’s research, the allowable loan should be increased to $25,000 to account for inflation since 1992. The Toronto Real Estate Board indicated support for this position to the Finance Committee.
The Toronto Real Estate Board’s presentation was well received by the Finance Committee. The Canadian Real Estate Association continues to work on these issues and the Toronto Real Estate Board is planning individual meetings with MPs.