End tax loopholes to fix the housing crisis!

Facts

18 September 2024

A highrise in Ottawa with the roof of an old Bank of Nova Scotia in the foreground

Canadians are suffering from an ongoing housing crisis. While home ownership is increasingly out of reach for multiple generations, average rent prices are outpacing the cost of living, which is contributing to poverty, intimate partner violence, unsafe living conditions, and increased houselessness.

In 2023 alone, rents rose 8% as wages grew by only 5%. At the same time, the real estate sector’s profits increased by a staggering 40% over pre-pandemic levels. Much of this outsized growth came from the capital gains loophole - profits being taxed at half the inclusion rate of workers’ income.

Real estate investment trusts (REITs) are receiving preferential tax breaks while buying up Canada’s rental housing, raising rents, and posting massive profits.

The real estate industry is raking it in while applying enormous pressure on renters. This has got to stop.

Ending the preferential tax treatment of the real estate industry would discourage the commodification of housing and raise revenues to fund the creation of 1 million non-market homes.

It’s time to close these loopholes to fund affordable housing in Canada, now!

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To : Finance Minister Leblanc and Housing Minister Fraser

CC: Don Davies, Gabriel Ste-Marie, Mike Morrice, Jasraj Singh Hallan, Alexandre Boulerice, Scott Aitchison, Xavier Barsalou-Duval

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Dear Finance Minister LeBlanc,

Our housing affordability crisis in Canada is being fueled by tax breaks for financial companies that own more and more of our real estate. A new report by Canadians for Tax Fairness shows how the capital gains tax break and preferential tax treatment for Real Estate Investment Trusts incentivize corporations to treat housing as a financial asset instead of a human right.

In 2023 alone, rents across the country increased by an alarming 8% while wages grew by only 5%. Meanwhile, the real estate sector’s profits soared to $50.4 billion, a 40% increase over pre-pandemic levels. A significant portion of that growth was achieved through capital gains and taxed at half the rate of normal income.

The report also shows that REITs, which own over 200,000 rental units in Canada, benefit from tax loopholes that allow them to distribute gains to investors tax-free. In 2022, the largest seven residential REITs distributed $100 million tax-free to investors, largely through the partial inclusion of capital gains.

Housing is a fundamental human right, and it is unacceptable that the financialization of our housing market is pushing so many Canadians into precarious living situations. The government must act swiftly to reform policies that encourage the commodification of housing and instead ensure that housing remains affordable for all.

I call on the government to build 1 million non-market homes in the next decade and pay for it by ending the tax breaks that are fuelling our housing crisis.

Sincerely,