GST cuts will impact both residential and commercial property sales.
Edmonton, May 4, 2006: The one per cent reduction in the GST announced in the federal budget will have an impact on commercial real estate transactions after July first.

“A reduction in the GST rate is also good news for anyone who buys or leases a commercial property,” says Mark Thiessen, the Winnipeg REALTOR® who is also Chair of the National Commercial Council of The Canadian Real Estate Association.

Keith Morrissey, Commercial Division Manager of the Edmonton Real Estate Board explains that when the GST was introduced, it immediately added seven per cent to the costs of occupancy of leased premises. “It also added seven per cent to the purchase price of commercial real estate, or value proportion thereof for commercial and residential mixed properties. This is extremely important to note for businesses that do not collect GST, as this is a direct cost.”

The federal budget announced that the one per cent reduction in the GST will take effect July 1. If the property is not transferred until after that date, a six per cent GST rate will apply.

Commercial REALTORS® were disappointed that the federal budget did not address the government’s election promise to introduce a rollover of capital gains tax on the sale of assets when the proceeds are reinvested within six months. “We appreciate that everything can’t be done in one budget,” said Morrissey. “We expected some assurances in the budget document that the government will deliver on this promise.”

“The Canadian Real Estate Association has conducted extensive research on the benefits of a rollover of capital gains tax to small-scale investment in real estate,” Thiessen added. “We look forward to working with the federal government on the design of a capital gains reinvestment plan that will provide broad economic benefits.”