More taxes on real estate investment trusts won’t solve the housing crisis
The solution to the housing crisis is simple: We need more homes, of all kinds.
At Canadian Apartment Properties Real Estate Investment Trust (CAPREIT), we are part of that solution. We provide rental homes for Canadians. However, we have a simple problem.
In the 2021 mandate letters, Prime Minister Justin Trudeau asked the ministers of housing and finance “to expand Canada’s housing supply” and “review and consider possible reforms to the tax treatment of REITs.”
These priorities are in conflict. A REIT, like us, is essentially a form of mutual fund. Investors buy into REITs, and the resulting funds are used to build rental homes. Like shares in a publicly traded company, investors’ stakes in REITs earn dividends and go up and down with the market.
Despite representing just 3 per cent of the national rental housing market, REITs are important vehicles for efficiently allocating funds into housing development – building more homes.
By pursuing the review and possible tax reforms, the government is discouraging investment in REITS. That has unintentionally turned off the taps for REITs to build and expand housing supply, as the shadow of possible reforms has created market uncertainty. It’s exactly the opposite of what Canada needs right now. …[Read More]