On April 7, 2022, Finance Minister Chrystia Freeland introduced the 2022 Federal Budget (the “Budget”). Included in the Budget are the following real estate related measures:
- Two-Year Ban on Foreign Homebuyers. The Budget contemplates new rules to prohibit foreign commercial enterprises and individuals who are not Canadian citizens or permanent residents from acquiring residential property in Canada for two years. Notably, refugees, foreign workers and international students on the path to permanent residency are expected to be exempt.
- First Time Homebuyers Incentives. The Budget introduces a Tax-Free First Home Savings Account that will allow first-time homebuyers to contribute up to a maximum of $40,000. Contributions to this account would be tax-deductible like an RRSP, while withdrawals to buy a home would be non-taxable like a TFSA. In addition, the Budget doubles the existing First-Time Home Buyers' Tax Credit (from $5,000 to $10,000).
- CMHC and Co-Operative Housing Funding. The Budget provides $4 billion over five years to the Canada Mortgage and Housing Corporation (“CMHC”) to establish a new Housing Accelerator Fund. The purpose of this Fund is to speed up the planning and delivery of housing in municipalities and aims to create 100,000 new housing units over the next five years. In addition, the Budget provides $1.5 billion over two years to expand CMHC's existing Rapid Housing Initiative, which is expected to allow the construction of at least 6,000 new affordable housing units. Lastly, the Budget provides for an additional $1 billion in loans to support co-operative housing projects.
- Anti-Flipping. The Budget contemplates new rules requiring any person who sells residential property they have held for less than 12 months to be subject to full taxation on their profits (i.e. as business income). This will apply to residential properties sold on or after January 1, 2023. Notably, exemptions would apply for Canadians who sell their home due to certain life circumstances e.g. death, disability, the birth of a child, a new job, or a divorce.
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