What’s in the Federal Budget for Home buyers?
The federal government has earmarked more than $10 billion in new spending for housing-related initiatives, much of which is focused on increasing supply.
In terms of housing initiatives, the federal budget delivers on a number of Liberal Party campaign promises made during the last election, with one notable exception. Absent was the proposal to increase the insured mortgage cut-off from $1 million to $1.25 million.
The $10 billion in housing-related spending over the next five years includes:
- $4 billion for a new Housing Accelerator Fund starting in 2022-23, to the Canada Mortgage and Housing Corporation. The fund will target the creation of 100,000 net new housing units over five years. Government supports will be targeted to ensure a balanced supply that includes a needed increase to the supply of affordable housing.
- $475 million to provide a $500 one-time payment to those facing housing affordability challenges.
- Introduction of the Tax-Free First Home Savings Account that would give prospective first-time home buyers the ability to save up to $40,000. Like an RRSP, contributions wouldbe taxdeductible, and withdrawals to purchase a first home including investment income— would be non-taxable, like a TFSA. Tax-free in, tax-free out.
- Doubling the First-Time Home Buyers’ Tax Credit amount to $10,000. This works out to a benefit of up to $1,500 for the homebuyer.
- Changes to the First-Time Home Buyer Incentive. The budget extends the $1.25 billion First-Time Home Buyer Incentive program to March 31, 2025, while the government said it’s exploring options to make the program “more flexible and responsive” to the needs of first-time buyers.
The government also introduced several measures it says will strengthen the integrity of the housing market and address foreign investment, property flipping and speculation.
- A ban on non-Canadian citizens or permanent residents from purchasing non-recreational residential property in Canada for a period of two years.
- A crackdown on property flipping, imposing full taxation on sellers who have held their property for less than 12 months.
- Taxing assignment sales of newly constructed or substantially renovated residential housing taxable for GST/HST purposes, effective May 7, 2022.
- An end to blind bidding as part of a promised Home Buyers’ Bill of Rights. Multigenerational Home Renovation Tax Credit
- Introduction of a Multigenerational Home Renovation Tax Credit, which would provide up to $7,500 in support for constructing a secondary suite for a senior or an adult with a disability.
This is just a snippet of the full budget, full report: budget.gc.ca/2022.
If you’d like to know more about any of the housing-related items in the budget and how they might impact your plans, don’t hesitate to give me a call.
Candace Perko,
Mortgage Broker
