On April 7, 2022, the federal government announced the details of its 2022 budget. Housing affordability is a major consideration of this budget and, as such, the federal government is proposing to take numerous actions targeted at housing and the real estate sector. A summary of key items is provided below.
The budget includes numerous actions targeted at increasing the supply of housing available for purchase and rent, which TRREB has been strongly advocating for. TRREB is continuing to analyze the budget announcements and will be working closely with the Canadian Real Estate Association to address issues, as necessary. The announced budget has not yet been approved by Parliament, but it is expected to be approved and implemented.
The federal budget proposes the following actions with regard to housing and real estate:
- Provide $4 billion over five years, starting in 2022–23, to the Canada Mortgage and Housing Corporation to launch a new Housing Accelerator Fund. The fund will be designed to be flexible to the needs and realities of cities and communities and could include support, such as an annual per-door incentive for municipalities or up-front funding for investments in municipal housing planning and delivery processes, that will speed up housing development. Its focus will be on increasing supply, but government supports will be targeted to ensure a balanced supply that includes a needed increase to the supply of affordable housing.
- Introduce 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. Starting in 2023, this refundable credit would allow families to claim 15 per cent of up to $50,000 in eligible renovation and construction costs incurred in order to construct a secondary suite.
- Introduce 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 would be tax-deductible, and withdrawals to purchase a first home – including investment income – would be non-taxable, like a TFSA. The government intends to work with financial institutions to ensure that a Tax-Free First Home Savings Account could be opened and contributed to in 2023.
- Double the First-Time Home Buyers’ Tax Credit amount to $10,000. The enhanced credit would provide up to $1,500 in direct support to home buyers. This measure would apply to homes purchased on or after January 1, 2022.
- Extend the First-Time Home Buyer Incentive which allows eligible first-time home buyers to lower their borrowing costs by sharing the cost of buying a home with the government to March 31, 2025. The government is exploring options to make the program more flexible and responsive to the needs of first-time home buyers, including single-led households.
- Provide $200 million in dedicated support under the existing Affordable Housing Innovation Fund to help develop and scale up rent-to-own projects across Canada. This will include $100 million to support non-profits, co-ops, developers, and rent-to-own companies building new rent-to-own units.
- The budget announces the federal government’s intention to engage with provinces and territories over the next year to develop and implement a Home Buyers’ Bill of Rights and bring forward a national plan to end blind bidding. Among other things, the Home Buyers’ Bill of Rights could also include ensuring a legal right to a home inspection and providing information on the history of sales prices on title searches. To support these efforts, Budget 2022 proposes to provide $5 million over two years, starting in 2022–23, to the Canada Mortgage and Housing Corporation.
- Restrictions that would prohibit foreign commercial enterprises and people who are not Canadian citizens or permanent residents from acquiring non-recreational, residential property in Canada for a period of two years. Refugees and people who have been authorized to come to Canada under emergency travel while fleeing international crises would be exempted. International students on the path to permanent residency would also be exempt in certain circumstances, as would individuals on work permits who are residing in Canada.
- Introduce new rules to ensure profits from flipping properties are taxed fully. Specifically, any person who sells a property they have held for less than 12 months would be considered to be flipping properties and would be subject to full taxation on their profits as business income. Exemptions would apply for Canadians who sell their home due to certain life circumstances, such as a death, disability, the birth of a child, a new job, or a divorce. Exemptions will be set in forthcoming rules and Canadians will be consulted on the draft legislative proposals. This measure would apply to residential properties sold on or after January 1, 2023.
- Make all assignment sales of newly constructed or substantially renovated residential housing taxable for GST/HST purposes, effective May 7, 2022.
