In 1972, the federal government eliminated capital-gains deferrals for rental buildings. These tax deferrals gave owners of rental building incentives to continually reinvest in purpose-built rental housing. Without this incentive, owners are encouraged to hold onto real estate longer, slowing the redevelopment process. Since this change in tax policy, investment in new purpose-built rental housing has been stagnant all across Canada. The Victoria Real Estate Board supports tax policy change that would re-instate the capital-gains deferral and has recently provided funding to the UBC Sauder School of Business to study this policy question. These changes are also supported by tenant advocacy groups who point to low vacancy rates and rising rents as two of the consequences of a limited supply of purpose-built rental housing.
The Canadian Rental Housing Coalition supports these proposed tax policy changes. Goal 2 of the CRHC Charter states: Reinstate federal tax incentives to stimulate private market rental housing. Read the full CRHC charter and add your organization’s endorsement here: Canadian Rental Housing Coalition Charter
Media:
- Times Colonist: Tax change prescribed to relieve rental squeeze & Are tax changes needed? Study to take hard look
- Reinvestment in Real Property: The Canadian Real Estate Association’s Submission on Why Canada Needs Capital Gains Tax Deferrals – Canadian Real Estate Association, January 2008
- Creating a Positive Climate for Rental Housing Development Through Tax and Mortgage Insurance Reforms - Ontario Housing Supply Working Group, November 2002
- Options for Changes in Federal Taxes to Encourage New Rental Construction - Ontario Ministry of Municipal Affairs and Housing – March 2002
- Fiscal Impact of Federal Tax Legislation on Residential Rental Rates in Canada - Prepared by Crawford Paterson Campbell for CFAA, 1999
- Economic Impact of Federal Tax Legislation on the Rental Housing Market in Canada - Canadian Federation of Apartment Associations – November 1998
