To make up for the lack of housing and the difficulty of accessing property, the Trudeau government is working twice as hard in its new budget by disbursing $9.4 billion which will be used to finance a panoply of measures. Here are a few.
A new tax-free savings account
As promised during the election campaign, the Trudeau government is setting up a new Tax-Free Savings Account for the purchase of a first home (TFSA), which could be opened as early as 2023.
Canadians looking to buy a first home will be able to put up to $40,000 in this new account with tax-deductible annual contributions of up to $8,000. Amounts withdrawn at the time of purchase of the property will not be subject to tax – but amounts withdrawn for other purposes would.
Unlike in the case of the Home Buyers’ Plan (HBP) with an RRSP, where the taxpayer must repay the amount withdrawn within a period of 15 years, he will not have to do so with this new account, which cannot be used only once.
If the RAP remains available, however, it will not be possible to benefit from this plan at the same time, while withdrawing amounts from the CELIAPP for the same property.
Increase in the tax credit for the purchase of a home
Another measure to encourage home ownership: the federal government is doubling the home buyers’ tax credit — from $5,000 to $10,000, thus providing tax relief of up to $1500 (down from $750 previously). The measure applies to properties purchased from January 1, 2022.
Increase in housing supply
In addition, the government is injecting $4 billion into the Canada Mortgage and Housing Corporation (CMHC) to accelerate the creation of some 100,000 housing units across the country.
Ottawa is also granting an additional $1.5 billion over two years to CMHC to “quickly build” more than 6,000 new affordable housing units.
Curb the “flips”
The federal budget plans to introduce new rules to slow down real estate speculation by curbing “flips”, ie the rapid resale of properties at higher prices.
From now on, any resale of a property acquired within the last 12 months will be considered a “rushed resale” and will be subject to full taxation on its profits as business income.
A few exceptions apply, in the event of death, a new job, the birth of a child or a divorce, for example.
Ban on buying for foreigners
Ottawa wants to ban foreigners from buying property in Canada “to ensure that homes are owned by Canadians rather than foreign investors,” the budget says.
The government would prohibit foreign companies and individuals who are not Canadian citizens or permanent residents from acquiring residential property for a period of two years.
A charter of rights for buyers
The Trudeau government announces that it intends to work with the provinces to implement a “home buyers’ charter of rights” which could include the assurance of a legal right to an inspection, as well as a “national plan to end to blind bidding”.