To compensate for the lack of housing and the difficulty of access to property, the Trudeau government is doubling down in its new budget by disbursing $9.4 billion which will be used to finance a panoply of measures.
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 property (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 Amounts withdrawn at the time of purchase of the property will not be subject to tax — but amounts withdrawn for other purposes would.
Unlike the Home Buyers’ Plan (HBP) — from RRSP funds — under which the taxpayer must repay the amount withdrawn within 15 years, he will not have to do so with this new account, which can only be used once.
If the RAP remains available, however, it will not be possible to benefit from this plan 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 access to home ownership: the federal government is doubling the tax credit for the purchase of a home, which increases it from $5,000 to $10,000, and thus allows tax relief of up to up to $1500, down from $750 previously. The measure applies to properties purchased from 1er January 2022.
Five hundred dollars in housing assistance. Like the Legault government, the federal government will also distribute $500 in aid to taxpayers. The federal check would take the form of a “one-time payment” paid to Canadians who face difficulties accessing affordable housing. The details and mode of delivery of the measure, which is expected to cost $475 million, will be revealed at a later date.
Increase in housing supply. “The biggest problem” that causes the rise in housing prices is the lack of supply, mentions the Ministry of Finance in this new budget.
To make up for this deficit, the government is injecting $4 billion into the Canada Mortgage and Housing Corporation (CMHC) so that it can 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 so that more than 6,000 affordable housing units can be built quickly.
Curb the ”
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.
Some exceptions apply, such as cases of death, new employment, birth of a child or divorce, for example.
Prohibition of purchase 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”.
Help with the renovation of multi-generational homes. To help seniors living with their children or disabled adults living with their parents, the federal government is proposing a new refundable tax credit for the renovation of multi-generational homes.
Starting in 2023, this refundable credit would allow families to claim a 15% refund of a maximum amount of $50,000 paid in eligible expenses for the renovation and construction of a secondary dwelling.
Assistance could therefore reach $7,500 for the construction of a secondary dwelling for an eligible adult — that is, an elderly person or an adult with a disability.