REALTORS(R) propose changes to capital gains tax - Government urged to extend tax rollover to small investors



    OTTAWA, March 16 /CNW Telbec/ - The Canadian Real Estate Association
(CREA) has been calling on the federal government to make changes to the
Capital Gains Tax that would provide several economic benefits, including a
boost in Canada's productivity, expansion of rental housing, and encouragement
of urban regeneration.
    CREA Chief Executive Officer Pierre Beauchamp said the Association has
met with Members of Parliament and government officials to outline a proposal
to allow the deferral of capital gains tax and recaptured capital cost
allowance when an investment property is sold, and the proceeds of the sale
are invested in another investment property within one year.
    Beauchamp noted that small investors are holding onto their investments
because of the tax consequences associated with selling and reinvesting.
"Small investors are avoiding capital gains tax by not selling their real
property investment, and this is unduly influencing typical market activity,"
noted Beauchamp.
    Members of CREA's Canadian Commercial Council, a group of REALTORS(R) who
specialize in commercial and industrial properties, believe a deferral would
trigger economic activity as small investors typically undertake renovations
and make related purchases when they reinvest. In many communities, small
investors are at the heart of community development and redevelopment
initiatives.

    The Canadian Real Estate Association has commissioned expert research,
which has identified four significant benefits from a rollover of capital
gains tax for small investors:

    
    1. It will enhance Canada's productivity because taxation is one of the
       factors weighting down the investment climate.
    2. It will reduce tax discrimination that is deterring investment in
       rental housing in Canada. A series of tax changes over the past 25
       years has discouraged the private sector from building and maintaining
       rental housing. Rental housing is as productive as other forms of
       investment, producing a future flow of accommodation services.
    3. It will facilitate the management of real estate investment portfolios
       for Canada's aging population. The Canadian worker must be more self-
       reliant in retirement and this proposal allows small investors to best
       manage their risk exposure in concert with market changes.
    4. It will support increasing labor mobility that is essential to
       Canada's economic prosperity. Households can now move their
       belongings, stocks and bonds, but are unable to move their real
       property investments without facing substantial tax consequences.
    

    Representatives from The Canadian Real Estate Association will be
available for comment on any capital gains tax issues raised by the Federal
Budget on March 19th. Additional information can be found on the association
web site www.crea.ca, under the Federal Affairs/Issues tab




For further information:

For further information: Bob Linney, Communications Director, Canadian
Real Estate Association, Office: (613) 237-7111, Cell: (613) 795-4346

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The Canadian Real Estate Association

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