A Federal Housing Advocate report suggests Parliament should eliminate the real estate investment trust industry, which holds $76 billion in real estate, and explore “other tax measures to curb financialization of housing.”.According to Blacklock’s Reporter, the cabinet on Wednesday did not say anything about the report but made it clear there would not be any taxes on home equity..“Financialization is a root problem driving unaffordability,” Advocate Marie-Josée Houle wrote in her Observational Report. .“Financialization is a term used to describe how changes in the global economy have increasingly made housing a focus of speculative, often short-term investment.”.The report recommended Parliament “ban real estate investment trusts.” .Since 1993, Parliament has allowed small investors to put money into investment trusts to purchase small stakes in multi-billion-dollar real estate ventures..According to an April 3 Budget Office report Cost of Removing Tax Exemptions for Real Estate Investment Trusts, the trusts have received preferential federal tax treatment since 2011, which is estimated to be worth about $54 million annually..Realty trusts own about 20% of private, purpose-built rental units nationwide with “spectacular growth” in the sector, said the Budget Office. .“Total trust assets grew from $80 million in 1993 to $76 billion in 2021 and the number of rental suites in apartment buildings owned by trusts increased from zero in 1996 to nearly 200,000 in 2021,” wrote analysts..Advocate Houle wrote she had other proposals to change tax policy on housing and would “develop legislative and policy recommendations for government to implement better protections against the financialization of housing and its impacts.” .The Observational Report did not elaborate..On Wednesday, Housing Minister Sean Fraser excluded the possibility of an equity tax on primary residences..“We do not have plans to do away with that particular policy,” Fraser told reporters..The Canada Mortgage and Housing Corporation (CMHC) had previously allocated $450,000 to fund the commissioning and promotion of a report Wealth and the Problems of Housing Inequity Across Generations..This report, released on January 5, 2022, recommended the implementation of a $5.8 billion annual tax on home equity..The cabinet has consistently denied having any intentions to implement an equity tax..“It would be political suicide,” Michael Bourque, CEO of the Canadian Real Estate Association, testified last December 6 at the Senate National Finance committee. .“Those who do suggest it would probably preside at your political funeral.”.“Most Canadians have assumptions about their retirement based on the value of their home,” said Bourque. .“It’s why they can afford to sell their home and move into an old folks’ home or into some kind of care.”.In an Access to Information memo dated March 25, 2022, the CMHC acknowledged that implementing an equity tax would likely face widespread unpopularity..“It is not worthwhile,” said the memo.
