Recent tax provisions concern Canadian and foreign real estate owners.
Improvement of the purchase credit for a first property
PHOTO MARTIN CHAMBERLAND, THE PRESS
Home prices have skyrocketed recently.
The rising generation must contend with record real estate prices and rising interest rates. At least the governments have decided to give it a boost. Both Ottawa and Quebec are doubling the credit for the purchase of a first property in 2022. At the federal level, the credit goes from $750 to $1,500. For a Quebec individual, taking into account the abatement for Quebec residents, the value of the credit is $1,252.50, specifies the Chair in Taxation and Public Finance on its website. Quebec has harmonized and also offers tax relief of $1,500. The two together will make it possible to pay part of the property transfer rights (“welcome tax”) that the municipality will charge to the happy owners.
TFSAAPP
PHOTO GETTY IMAGES
The CELIAPP program will give a boost to home buyers.
The tax-free savings account for the purchase of a first property (TFSAP) begins to run from the 1er April 2023. It has no effect in the 2022 tax return. This will allow first-time home buyers to contribute up to $8,000 per year, and the lifetime limit will be $40,000 .
New rule on hasty resale of property
PHOTO DAVID BOILY, LA PRESSE ARCHIVES
Real estate flips will come under increased scrutiny.
Since 1er January 2023, there is a presumption, when the resale of an immovable occurs within one year after its purchase, to consider the net income realized on the resale as business income. Net business income is 100% taxable, while capital gains are only 50% taxable. This measure has no impact on the 2022 tax return. In addition, the owner of the building subject to a hasty resale in less than 12 months can no longer benefit from the exemption on the gain capital of a principal residence. There are exemptions in the event of death, separation, loss of employment and domestic violence, among others.
Underutilized Housing Tax
PHOTO HUGO-SÉBASTIEN AUBERT, LA PRESSE ARCHIVES
Condo building in Montreal
This new tax came into force on 1er January 2022 is primarily aimed at non-Canadians who own real estate in the country. This annual tax of 1% is calculated on the value of the building.
Non-Canadian Residential Property Purchase Prohibition Act
PHOTO JENNIFER GAUTHIER, REUTERS ARCHIVES
Many Chinese are buying properties in Vancouver.
This new law prevents non-Canadians from buying residential properties in Canada for a period of two years. Several exemptions are possible.