Calling for Change to Rules for Owners of Small Commercial Properties

May 16, 2013 Winnipeg, Manitoba – MREA and CREA are calling for federal changes to allow small business owners who buy commercial property to defer their recaptured depreciation when they sell their property. The two organizations believe that will encourage the “mom and pop” owners to buy more property – leading to a reinvestment in the community and often, more rental housing desperately needed in Manitoba.

REALTORS® from across Canada brought this issue to the attention of Members of Parliament in Ottawa in late April, as part of CREA’s annual Political Action Committee Days.

“We believe it’s a fairness issue, giving small investors the benefits of large investors,” says Lorne Weiss, MPAC Chair, who was one of about a dozen MREA members at the event.

MREA believes that small investors with only one or two income properties – and are categorized as “passive” investors by the Canada Revenue Agency – should get the same tax deferral benefits as large investors.

MREA would like to see the capital cost allowance deductions for these passive investors deferred if they purchased another investment property of equal or greater value. The investor would be able to continue to roll those deductions forward until they ceased to be an investor, allowing them to use more of their equity towards purchasing another property.

Weiss says the positive response from individual MPs in Ottawa is a step in the right direction, but more buy-in is still needed. “When we talk to the individual MPs they understand the rationale and the logic behind it. The issue, however, is the Finance Department, who sees it as an attack on their revenue streams.”

Typically small investors are heavily involved in the rental housing market, an area that we need a greater inventory of across Canada, says Weiss. “We believe by encouraging more investments in that area, in terms of more advantageous tax regulations, there would be more activity and as a result, more rental housing available.


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