Thank you. I appreciate being here today.
The Toronto Real Estate Board is an association of approximately 23,000 members from across the GTA, or the greater Toronto area. As one of those realtors, I can tell you we're proud of the contributions we make to our communities and to the economy. Whether it's supporting local minor sports leagues or organizing charity fundraisers, realtors are always at the forefront of community service. Realtors understand that the success of their businesses and their communities is indelibly linked.
In this regard, we believe the proposals presented to you last week by the Canadian Real Estate Association would create significant benefits for Canadian communities and the economy. From the perspective of Canada's largest urban region, we believe the Canadian Real Estate Association's proposal to promote reinvestment in real estate, to provide funding for rehabilitation of residential properties, and to adjust the homebuyers' plan for inflation are particularly important in addressing some of the key issues facing not only the GTA, but communities across Canada.
The first issue is the proposal to amend the Income Tax Act to allow for the deferral of the capital gains tax when an investment property is sold and the proceeds of the sale are reinvested in another property within one year. I want to stress that this would be a deferral of tax and not a forgone revenue for the federal treasury. The deferred taxes would eventually be paid when the investment property is sold and the proceeds are not reinvested. Furthermore, it is important to note that many owners of investment properties are not selling their properties because of the capital gains tax they would have to pay if they did. Therefore to some extent, the Canadian Real Estate Association proposal would be maintaining the status quo from a tax perspective, while creating new economic and social benefits for many communities.
From an economic perspective, the benefits of this proposal are clear. The sale of investment properties triggers economic spinoffs, such as renovations and everything associated with them. A study recently prepared for the Canadian Real Estate Association by Clayton Research Associates Ltd. indicates that each housing transaction generates close to $25,000 in spinoff spending over and above actual residential property sales, which last year meant $12.4 billion to the economy. Spinoff spending of investment property tends to be significantly higher.
In addition to economic spinoffs, there are a number of other benefits from this proposal. The Canadian Real Estate Association already articulated many of them to you last week, so I'd like to focus my comments on the benefits from this proposal that the Toronto Real Estate Board believes are most relevant to our region, specifically the quality of life in our urban centres.
The second issue I'd like to discuss is the residential rehabilitation assistance program, otherwise known as RRAP. This program helps homeowners with lower or fixed incomes to finance essential home repairs and upgrades and bring housing units up to a minimum standard for health, safety, and accessibility. A significant number of Canadian households are in dire need of this program.
Home ownership helps to form the basis for the economic well-being of families as well as individuals. Policies and programs that help Canadians with lower incomes access home ownership have significant economic and social benefits. The RRAP program plays an important role in this regard. The current federal funding commitment to RRAP ends in March of next year, and we're asking the committee to recommend a further three-year extension of RRAP funding to 2010.
The last issue I'd like to discuss is the highly successful homebuyers' plan, which allows homebuyers to borrow from their RRSP. This program has helped more than 1.5 million Canadians fund the down payment on their first home.
The continued success of this program depends in part in making sure it keeps pace with current real estate markets. Currently, first-time homebuyers are allowed to borrow up to a maximum of $20,000 from their RRSP to put toward the down payment of a home. This limit was set in 1992 and has not been adjusted since then to reflect inflation and specifically the considerable increases in home prices. As a result, down payments funded through the homebuyers' plan are covering an increasingly smaller portion of the purchase price of a home. In this regard, we are asking the committee to recommend the maximum loan be raised from $20,000 to $25,000 to account for inflation.
The Toronto Real Estate Board and the Canadian Real Estate Association both believe these issues are important, not only to realtors but also to the people and communities of Canada.
I hope you found our views helpful. Thank you for this opportunity. I'm sorry I raced through that last part; I wanted to squeeze it all in. Of course, I'd be happy to answer any questions.