Toronto 
Chrystia Freeland, Deputy Prime Minister and Minister of Finance, today released Canada’s budget for 2022.
As part of the budget, Freeland introduced some measures to rein in Canada’s highly-priced housing market including a ban on foreign investment in Canadian housing, and actions against property flipping.
There is good news for those who are looking to own a house for the first time – the 2022 Budget proposes 3 specific actions:
- Tax-Free First Home Savings Account: Prospective first-time home buyers can save up to $40,000 in the account. The news release reads, “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. Tax-free in, tax-free out.” This means that you can deduct contributions – up to $8,000 per year (the annual maximum) – from income, but the investment growth in the Tax-Free First Home Savings Account will not be taxable.
- First-Time Home Buyers’ Tax Credit: The government is also planning to double the First-Time Home Buyers’ Tax Credit amount to $10,000, providing up to $1,500 in direct support to home buyers, applying to homes purchased on or after January 1, 2022.
- Extension of the First-Time Home Buyer Incentive: This is an extension of the First-Time Home Buyer Incentive to March 31, 2025. The program allows eligible first-time home buyers to lower their borrowing costs by sharing the cost of buying a home with the government (5% or 10%).
Plans to Reduce High Costs of Homes
Freeland has also proposed new measures to reduce the cost of residential properties in the country. These include:
- A Ban on Foreign Investment in Canadian Housing: The government plans to 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.
- Property Flipping: Any person who sells a property they have held for less than 12 months would be subject to full taxation on their profits as business income. This will start applying to all residential properties sold on or after January 1, 2023. The government says exemptions would apply to 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. This means that if you sell your principal residence within a year of buying, you will have to pay tax on the profit.
- Taxing Assignment Sales: Currently, condo assignments are not subject to Goods and Services Tax/Harmonized Sales Tax as it is intended that the buyer will live in, once the building is completed. The government says this leads to speculation in the condo market, leading condos to be traded as commodities. To prevent this, all assignment sales of newly constructed and substantially renovated residential housing will be subject to sales tax, effective May 7, 2022.
- Supporting Rent-to-Own Projects: The government is planning to invest $200 million in dedicated support under the existing Affordable Housing Innovation Fund to help develop and scale up rent-to-own projects across Canada.
- Home Buyers’ Bill of Rights: According to the news release, the government plans to engage with provinces and territories to bring forward a national plan to end blind bidding and implement a Home Buyers’ Bill of Rights that will eliminate unfair practices like blind bidding or asking buyers to waive their right to a home inspection.
Multigenerational Home Renovation Tax Credit & Doubling the Home Accessibility Tax Credit
For those Canadians living with their parents, grandparents or in multigenerational homes, Canada is planning to provide up to 15 per cent of up to $50,000 (up to $7,500) for eligible renovation and construction costs in support of constructing a secondary suite for a senior or an adult with a disability, starting in 2023 under Multigenerational Home Renovation Tax Credit.
Budget 2022 doubles the qualifying expense limit of the Home Accessibility Tax Credit to $20,000 for the 2022 and subsequent tax years to help seniors and persons with disabilities to live and age at home. This means that those planning renovations and upgrades to homes safe and accessible can get a tax credit of up to $3,000—an increase from the previous tax credit of up to $1,500.
Other Highlights (Housing Sector)
Budget 2022 contains the following investments and actions for the housing sector:
- A Housing Accelerator Fund: This will create 100,000 net new housing units over five years, through an investment of $4 billion over five years, starting in 2022-23.
- Rapid Housing Initiative: $1.5 billion spending is proposed over two years, starting in 2022-23 to create at least 6,000 new affordable housing units, with at least 25 per cent of funding going towards women-focused housing projects.
- National Housing Co-Investment Fund: $2.9 billion in funding, on a cash basis, under the National Housing Co-Investment Fund to accelerate the creation of up to 4,300 new units and the repair of up to 17,800 units for the Canadians who need them most.
- Housing for Indigenous Communities: Budget proposes $4.3 billion over seven years towards improving and expanding Indigenous housing in Canada.
- Affordable Housing in the North: Budget 2022 proposes to provide $150 million over two years, starting in 2022-23, to support affordable housing and related infrastructure in the North, of which $60 million would be provided to the Government of Nunavut; $60 million to the Government of the Northwest Territories; and $30 million to the Government of Yukon.
- Long-Term Supports to End Homelessness: The government is planning to spend $562.2 million over two years, beginning in 2024-25, to support organizations working to prevent and address homelessness.
Detailed information on the budget is available here.
