Good morning and thank you Mr. Chair. On behalf of our over 100,000 REALTOR® members, I would like to thank the committee for the invitation.
Like MPs, our members' work connects them to the community. And 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 spin-off 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 spin-off 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 an active interest in financial literacy and collaborated with the Financial Consumer Agency of Canada on the Homebuyers' Road Map.
One of the most important government measures that supports responsible home ownership is the Home Buyers' Plan. According to a recent Nanos Research survey, 65.5% of Canadians believe the Home Buyers' Plan is valuable tool for Canadians interested in buying a home.
The Plan allows homebuyers to borrow up to $25,000 from their RRSP for a down payment. Since its implementation in 1992, the Plan has made homeownership a more affordable reality for over 2.6 million Canadians.
Unfortunately, inflation is slowly eroding the Plan's purchasing power. A homebuyer today is receiving $1,600 less value from the Plan than a homebuyer in 2009. By 2015, this loss in value will hit almost $2,500. This is why we are asking for the Home Buyers' Plan withdrawal limit to be indexed in $2,500 increments to the Consumer Price Index. Over time, this will maintain – not increase – 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 the Home Buyers' Plan. Allowing its use after job relocation, the death of a spouse, a marital breakdown or to accommodate an elderly family member would help individuals maintain homeownership through significant life changes by easing affordability concerns. This responds to a need we have heard expressed at this table during our last pre-budget consultation appearance and 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 (technically known as Capital Cost Allowance recapture) on income properties – a benefit similar to one large developers already enjoy.
Allowing this deferral for those who choose to reinvest proceeds of sale into a new building would unleash a chain reaction of economic, environmental and community renewal benefits.
Third-party costing research demonstrates the net cost of this proposal is only $12 million in the first year, and would be net revenue positive in year two, since Capital Gains Tax will be collected on the increased value of any properties using this deferral.
Thank you for your time and consideration.