Tax cuts invite land sharks

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by GEORGE MADDUX

As landlords enjoy the city's estimated 1.4 per cent apartment vacancy rate--possibly the lowest it's been since Jean Talon first manned a jib--they've also got another cause to celebrate. The new federal budget will allow them to keep more of their profits when they sell their properties. The slash on capital gains taxes from 66 to 50 per cent could encourage hustlers to buy and sell apartment buildings like trinkets at a market, a scenario that could only hurt the city, according to Pierre Gaudreau of local housing advocate FRAPRU. "That's definitely good news for land speculators, it will definitely help them," he says.

Land speculation--or hoarding land until prices go up--is generally blamed for artificially raising the cost of buildings, encouraging urban sprawl and favouring abandoned lots. And by making land more difficult to acquire, land specu-lation can slow housing growth and damage the entire economy.

However, a new wave of land speculation might not be inevitable, as the capital-gains tax cuts also apply to investments that don't need plaster and paint. Local investors haven't stampeded to buy commercial properties, as witnessed at an auction two weeks ago at which a half dozen Verdun six-plexes each sold for an extremely reasonable $130,000. "The issue of liquidity is going to hinder any rush to commercial real estate," says Carey Wilson of Price-Waterhouse. "It's not as easy to sell a building as it is a stock."

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