The real estate industry makes a lot of people happy: first-time buyers in their new homes, move-up buyers levering home equity into dream homes and move-down empty nesters happily planning their next stage in life. Now we can add one more group to this list: governments! And, that’s due to the nearly $10 billion in annual tax revenue generated by Canadian housing transactions through Board Multiple Listing Service (MLS®) Systems.
Last year, Altus Group undertook important research for The Canadian Real Estate Association tracking the many ties between resale housing transactions through Board MLS® Systems and the broader economy and found that some $23.7 billion per year of ancillary spending was generated as a result of purchases and sales of homes through Board MLS® Systems over the 2012-2014 period and an estimated 171,650 jobs per year were also supported by this activity.
Recently, we’ve gone back to the data and assessed what all this means for governments. The economic activity around home sales generates tax revenue in all sorts of ways: sales taxes on goods and services spending (appliances, lawyers, moving services, renovation products, contractors, etc.), sales taxes on newly-built or substantially renovated homes that are then sold through MLS® Systems, municipal fees related to inspections, hook-ups, certifications or other matters, land transfer taxes, income and payroll taxes related to the direct jobs created and income taxes related to the indirect and induced employment generated.
All told, some $9.3 billion in annual tax revenue is generated for governments. Governments at all levels benefit from a healthy number of transactions. We found that the economic activity related to home sales generated some $3.1 billion annually for the federal government, $4.6 billion for provincial governments and $1.2 billion for municipal governments across the country.
Ontario, Quebec and B.C., the three largest provinces, account for over 80 per cent of total government tax revenues from these sources.
Housing transactions have been buoyant in recent years and it is clear that Board MLS® System homes sales in Canada are a significant stimulus to the economy, and also an important contributor to the fiscal health of Canadian governments.
