Good morning and thank you, Mr. Chair.
On behalf of our over 107,000 realtor members, I'd like to thank the committee for the invitation to appear today.
Like MPs our members do work that connects them very closely to their respective communities. Similarly, our goal is to make communities across Canada better, safer, and stronger. Our recommendations carefully consider the fiscal limits of the current economic environment and can be implemented at little or no net cost while delivering economic spinoff benefits and creating jobs.
A balanced and stable real estate market is a crucial pillar of a strong economy. This year resale housing transactions will generate an estimated $22.3 billion in consumer spinoff spending and create more than 175,000 jobs.
Buying a home is the largest financial decision most Canadians will make in their lives. Increasing their financial understanding about this purchase is a crucial component of long-term housing market stability. This is why we have taken a great and active interest in financial literacy and have collaborated with the Financial Consumer Agency of Canada on the Homebuyers' Road Map, something we just provided to the clerk for distribution.
One of the most important government measures that support responsible home ownership is the Home Buyer's Plan. According to a recent Nanos Research survey, 65.5% of Canadians believe the Home Buyer's Plan plan is a valuable tool for Canadians interested in buying a home. The plan allows home buyers to borrow up to $25,000 from their RRSP for a down payment.
Since its implementation in 1992 the plan has made home ownership an affordable reality for over 2.6 million Canadians. Unfortunately inflation is slowly eroding the plan's purchasing power. A home buyer today is receiving $1,600 less value from the plan than did a home buyer in 2009. By 2015 this value will hit almost $2,500. This is why we're asking for the Home Buyer's Plan withdrawal limit to be indexed to the consumer price index in $2,500 increments. Over time this will maintain—not increase, but maintain—the plan's buying power. Importantly, there is no cost associated with this recommendation until 2016, at which time the cost would be $7.5 million.
We also share the view that vulnerable Canadians should be supported with a homebuyer's plan. Allowing its use after job relocation, the death of a spouse, or a marital breakdown, or in order to accommodate an elderly family member would help individuals maintain home ownership through significant life changes by easing affordability concerns.
This responds to a need we heard expressed at this table during our last pre-budget consultation appearance and also by our members. This proposal meets that need by allowing Canadians to borrow from their own savings rather than depend on government funding.
Finally to encourage community reinvestment, small investors should be allowed to defer recapture of previously claimed depreciation on income properties. This is technically known as “capital cost allowance recapture”. It is a benefit that is similar to one large developers already enjoy. Allowing this deferral for those who choose to reinvest proceeds of a sale into a new building would unleash a chain reaction of economic, environmental, and community-renewal benefits. Third-party costing research demonstrates that the net cost of this proposal is only $12 million in the first year and that it would be net revenue-positive in year two since capital gains tax would be collected on the increased value of any property sold using this deferral.
I appreciate and thank you for your time and consideration this morning.