Three key issues Realtors have been fighting for, Manitoba Real Estate Association (MREA) President Lorne Weiss said, are getting a capital-gains-tax rollover for commercial properties, raising the amount first-time homebuyers can borrow from their Registered Retirement Savings Plans (RRSPs) and requiring lenders to provide better disclosure to homeowners about the costs of ending a mortgage early. But so far all three of those issues haven’t gotten much play among federal politicians.
“We think the federal parties should be addressing our issues because they aren’t just specific to our industry,” Weiss told CRE Online. “Something like giving young people the ability to borrow more from their RRSPs to buy their first home doesn’t just apply to the real estate industry; it really applies to the economy as a whole.”
In 2009, the federal government adopted a policy proposal by the Canadian Real Estate Association (CREA) to increase the limit first-time homebuyers can withdraw from their RRSPs to purchase a property from $20,000 to $25,000. Now, Weiss said the organization wants the federal government to index that amount to inflation.
“Rather than having to go back to the federal government every four or five years, we would like to put a mechanism in place to have the amount indexed to the rate of inflation, just in the same way a pension is. We feel that would make RRSPs a more effective tool for first-time homebuyers,” said Weiss, the former chair of the CREA Federal Affairs Committee.
Give investors a break
Next, Weiss said the federal government should give property investors a year to reinvest their capital gains into another property before it’s taxed.
“We think that allowing a capital gains rollover for commercial properties will give investors more incentive to provide affordable rental units, something this country sorely needs. It will also allow more ma-and-pop-type investors to expand their portfolios,” he said. “And the money will be eventually taxed once investors cash out of their properties.”
Lastly, he said there needs to be better disclosure explaining the penalties homeowners will incur if they end their mortgage early.
Now, since there is no disclosure requirement many homeowners have been blindsided with bills in excess of $10,000 to break their mortgage. And how the banks actually arrive at the amount of the penalty has many Realtors confused, he added.
“When people go to sell their home and buy another one they find out the penalties for early discharge of their mortgage are humongous. So what we’d like to see is greater disclosure on mortgage documents, clearly stating what the penalties will be for early discharge of a mortgage and how those penalties are determined.”
As Realtors prepare to go to Parliament Hill to discuss policy on May 8 to 10, their lobbying efforts have been left in limbo since the fate of the current government is in question.
Pierre Leduc, a spokesperson for CREA, said that the organization was caught off guard like the rest of the Canadians when the election was called. Since the Realtors’ event was already scheduled, he said the organization chose to go ahead with it, but is still determining the nature of the event.
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