If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!
OTTAWA, Canada – A recent study prepared by the Altus Group for the Canadian Real Estate Association, suggests that federal tax policy negatively impacts commercial real estate sale and redevelopment in Canada.
The report claims “many income property owners are reluctant to sell and reinvest because of the capital gains tax and recaptured capital cost allowance.”
In other words commercial property owners tend not to sell their properties for redevelopment because the tax man would not leave them with enough money to reinvest in other projects. As a result many redevelopment projects that might otherwise be undertaken are simply not considered.
Increased commercial real estate activity is seen as an important way to stimulate the economy and create much needed jobs. Industry reports indicate that commercial real estate transactions declined by 51 percent in 2008, and dropped even further in the first half of 2009.
The report also highlights the fact that commercial real estate transactions result in significant spin-off activity. According to the study, almost $300,000 in direct spin-off activity is created with each multi-unit residential transaction.
CREA is recommending tax deferral on income property reinvestment to give a kick-start to commercial real estate sales. The report claims this would create jobs in the renovation, redevelopment and other construction sectors.
Related posts:
