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REAL ESTATE NEWS AND UPDATES

Summary of the Federal Budget regarding housing.

The Federal Budget 2022, released April 7, 2022, had a significant focus on housing for Canadians. Finance Minister Chrystia Freeland laid out how the government is planning to address housing affordability by adopting policies in three categories: building, saving and anti-flipping/foreign investment.

Here’s an initial summary of the housing measures announced on April 7, 2022.

BUILDING

The goal is to double housing construction by 2032. 

SAVING

  • A new Tax-Free First Home Savings Account: first-time home buyers can save up to $40,000 tax-free. Like RRSPs, contributions would be tax-deductible, and withdrawals to buy a first home, including investment income, would be non-taxable, like a TFSA. Tax-free in, tax-free out.
  • First-Time Home Buyers’ Tax Credit: double the amount to $10,000, providing up to $1,500 in direct support to home buyers, applying to homes bought on or after January 1, 2022.
  • Home Accessibility Tax Credit: double the qualifying expense limit to $20,000 for 2022 and subsequent tax years. This tax credit of up to $3,000 is an increase from the previous tax credit of up to $1,500 for important accessibility renovations or alterations.

ANTI-FLIPPING/FOREIGN INVESTMENT

  • Flipping tax: anyone selling a property they’ve held for less than 12 months will be taxed on their profits as business income, applying to residential properties sold on or after January 1, 2023. There will be exceptions for Canadians selling their home due to life circumstances such as a death, disability, the birth of a child, a new job, or a divorce.
  • Foreign ownership restrictions: to prohibit foreign commercial enterprises and non-Canadian citizens or permanent residents from acquiring non-recreational, residential property in Canada for a period of two years. This will apply to detached homes and stratas. Permanent residents, foreign workers, foreigners buying their primary residence, and students will be excluded from the new legislation.

The government will have the power to implement penalties for non-compliance.

  • Review of housing as an asset class: to better understand the role of large corporate players in the market and the impact on renters and homeowners, the government plans to look at options and tools, including potential changes to the tax treatment of large corporations investing in residential real estate.

AFFORDABLE HOUSING

  • $1 billion for the construction of affordable housing units; and
  • $2.9 billion in loans and funding for co-op housing to accelerate the creation of up to 4,300 new units and the repair of up to 17,800 units.

NEW TAXES

GST/HST on assignment sales: Budget 2022 proposes to make all assignment sales of newly constructed or substantially renovated residential housing taxable for GST/HST purposes, effective May 7, 2022. The federal government wants homes to be lived in and not commodities to be traded and profited upon by housing speculators. The GST/HST has not been applied if the buyer initially intended to live in the home, which may have led to speculator dishonesty and the uneven application of GST/HST to the full and final prices of new homes.

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