Good morning.
My name is Diana Mendes. I am here today as a spokesperson for the Saskatchewan Rental Housing Industry Association, or SRHIA. Tyler Stewart, SRHIA's director, was slated to speak at a session of this committee that was to take place in Saskatoon. Unfortunately, that session was cancelled, and he was unable to travel to Ottawa, so I am here in his place.
SRHIA represents the Saskatchewan rental housing industry. SRHIA is also a member of the Canadian Federation of Apartment Associations.
For many years in Canada, public policies at all levels of government have promoted home ownership. Most recently, in the 2009 federal budget, homeowners were given billions of dollars under the home renovation tax credit, while renters were ignored. However, most low-income Canadians are not homeowners, and the larger part of income tax benefits of home ownership do not accrue to low-income households even if they are homeowners.
The current tax position means that Canada’s housing markets are not providing the housing opportunities in the rental sector needed by households with low and moderate incomes, and by people who move between cities. Excess home ownership inhibits labour mobility and raises unemployment rates.
In order to move toward a balanced housing policy, we suggest that the budget should provide improved tax rules for rental housing to move the tax position of renters closer to that enjoyed by homeowners. In the 2011 budget, the improved rule should be a tax deferral of capital gains and recapture of CCA when rental real estate is sold and another property of equal or greater value is bought within 12 months. Allowing this tax deferral on real estate sale and reinvestment would reduce the cost of rental housing and improve affordability of the housing supply. It would promote efficient capital allocation across the economy. It would promote more compact, environmentally sound urban redevelopment. It would help small investors, middle-income families, as well as seniors. It would permit relocation by owners and managers, and reduce absentee ownership. It would level the rules between rental property and other businesses, level the rules between businesses that rent and those that own their premises, and level the rules between rental property and shares in companies.
The deferral cost of the proposal is reasonable. The federal government revenues that would be deferred by the proposal in the first year after implementation are approximately $450 million. In the years that follow the first year, the direct deferral amount should decrease, given that taxes payable, deferred from the first and subsequent years, would appear as an additional tax payable thereafter.
Thank you.