November 25, 2009
Goldring asks pbo to investigate taxation inequality of private sector multi-unit rental housing industry compared to other private sector industries
“The number of homeless people is at an all-time high in Canada, a direct result of a lack of affordable entry-level private sector rental housing. Struggling, working poor families are similarly stressed in their quest for affordable rental housing. However practically no new private sector multi-unit rental housing has been built since the capital gains tax rollover provisions were removed.
“The re-introduction of a multi-unit rental housing industry capital gains rollover proviso in the Income Tax Act equal to other private sector businesses, as was in place years ago when the private sector rental development industry prospered, would be at least revenue neutral to the taxpayer, and perhaps even revenue positive, if we take fully into account the expected increase of new business developed,” says Mr. Goldring.
“The entry-level private sector multi-unit rental housing market in Canada has been dormant for a number of decades through a combination of issues, but primarily because of the removal more than 20 years ago of the capital gains rollover provisions. At the same time, older apartment rental units have been converted to condominiums - artificially raising the market rents for the fewer and fewer remaining entry-level units. Meanwhile the non-profit sector, even at great cost to taxpayers, cannot fulfill the market needs for entry-level independent living rental housing.”
Mr. Goldring says the proposed capital gains rollover requires no new federal funding but rather is more of a technical change for capital gains taxation roll-over time extensions for existing and new rental property owners and developers equal to other private sector businesses, to encourage them to participate in development of new rental properties.
“Our government already has a financial commitment to funding affordable housing. However, if the private sector rental housing industry was again allowed capital gains rollover equivalent to other private sector businesses, there would be a shifting of emphasis to independent living entry-level multi-unit rental homes from the inefficient, very expensive, social non-profit housing to the more efficient private sector. The end result will be greatly increased numbers of independent living private sector multi-unit rental housing projects. The benefit will be a stimulus to the construction and forestry industries across Canada, both of which are struggling in this economic downturn.”
Mr. Goldring says he has asked the Library and the PBO to provide a comparable costing analysis of the initiative.
In 2008 some 250 companies and individuals were surveyed in Edmonton’s private sector rental housing development and management sector. The number one concern as an impediment to the development of new private sector rental housing was lack of a capital gains rollover.
Peter Goldring is the author of two books on housing: Housing Affordability: An Edmonton Concern and a National Challenge (2000) and Housing Affordability: Still an Edmonton Concern and a National Challenge (2008).