May 2010
Connections (May 2010)
Connections: Advocacy News from the British Columbia Real Estate Association – May 2010 
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 Shelter Taxes and Fairness

Despite BC's competitive tax structure in other areas, British Columbians continue to pay inordinately high taxes when buying homes.

Even though the province's Property Transfer Tax (PTT) has been in place since the late 1980s, and legislation to repeal the Provincial Sales Tax received Royal Assent on April 29 (making way for the Harmonized Sales Tax), the BC Real Estate Association (BCREA) believes opportunities exist to improve housing affordability.

At the end of April, in meetings with 73 of BC's 85 MLAs, REALTORS® from around the province encouraged elected officials to take two specific actions:

  1. Index the HST new home rebate threshold using the New Housing Price Index, making adjustments annually. Taking this step will ensure future buyers of new homes are treated the same as those who buy when the HST is first introduced.

  2. Restructure the PTT to more accurately reflect the realities of the housing market in BC. When the tax was first introduced, the 2% portion (which is applied to the fair market value above $200,000) was expected to be charged on about 5% of properties sold; in 2009, it was applied to 88% of homes sold through the Multiple Listing Service®.

For more information about provincial shelter taxes, including a study on tax competitiveness, a new home tax calculator and emails that can be sent directly to MLAs, visit www.bcrea.bc.ca/government-relations/shelter-taxes.

 Advancing Residential and Investment Property Ownership

Ownership of real property enhances personal net worth, builds better communities and provides a sense of security. In early May, nearly 300 Canadian REALTORS®, including representatives from real estate boards across British Columbia, made two clear proposals to their Members of Parliament:

  • Allow the capital gains tax and the recaptured capital cost allowance to be deferred when an income property is sold and the proceeds are reinvested in another income property within one year.
    Removing the disincentive to reinvestment, by allowing tax deferral, would rapidly trigger a chain reaction of benefits for the economy, communities and the environment. This proposal is supported by several organizations, including the Canadian Construction Association and the Appraisal Institute of Canada, and the Canadian Chamber of Commerce has passed a policy resolution recommending tax deferral on property reinvestment.
  • The Home Buyers' Plan (HBP) RRSP withdrawal limit needs to be indexed to ensure it never loses its buying power.
    Since it was introduced in 1992, the HBP has made home ownership a more affordable reality for more than two million Canadian households. On the other hand, during that same period the average home price has doubled in eight of ten provinces. While federal Budget 2009 increased the withdrawal limit to $25,000 from $20,000, this move does not ensure the future buying power of the program.

For more information, visit http://www.crea.ca/ and click on Federal Affairs.

 Modernizing BC's Water Act

The Water Act, established in 1909, is the principal law for managing the diversion and use of provincial water resources, and plays a key role in the sustainability of BC's water. With changes in climate, population and water use, the provincial government has undertaken a review of the Act. Modernizing the Water Act is about making water laws easier to understand, communicate, administer and enforce as the province responds to current and future challenges.

Water is one of BCREA's primary public policy issues, with particular emphasis on conservation, governance and flood management. Therefore, the Association submitted the following recommendations, as part of the first round of public consultations:

  1. One provincial ministry should manage all aspects of water governance, and standards should be enforced on a regional basis, rather than by municipality. This important resource requires a framework that allows all levels of government and the public to understand everyone's roles and responsibilities.

  2. Standards should be enforced consistently by all regions around the province.

  3. Conservation is an essential element of water management, and BCREA is interested in working with the Ministry of Environment to increase awareness among consumers. Nearly 18,000 REALTORS® around the province have unique insights into their communities, and speak with tens of thousands of British Columbians every day.

More information about Water Act Modernization and Living Water Smart is available at http://www.livingwatersmart.ca/.

 Balance is Essential

On February 2, the BC Ministry of Finance released a consultation paper that noted anticipated shortfalls in Canada's retirement income system. According to the paper, three out of four private sector workers are not covered by a workplace pension plan—REALTORS® are clearly among those not covered.

In examining the consultation paper, BCREA found that the options presented were focused on more or less mandatory programs that relied on large pools of assets to take advantage of economies of scale, but without a thorough understanding of why Canadians do not participate fully in voluntary savings plans.

Among other recommendations, BCREA has suggested the government consider balancing the benefits of economies of scale with personal choice and freedom, examine the possibility of major capital losses when managers of a large asset pool make mistakes, conduct additional research to ensure citizens' pre-retirement incomes are not compromised in an effort to ensure their post-retirement incomes, and consider the role of residential equity in a household's savings plan.

 Contact Us

What are your organization’s positions on the public policy issues addressed in this issue of Connections? Please contact us at [email protected] with your comments about these issues, or to update BCREA on your organization’s successes.

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British Columbia Real Estate Association
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PO Box 10123, Pacific Centre
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