Ban on Foreign Investment in Canadian Housing
Written by: Remington Joseph
The Government of Canada has recently revealed its new budget for 2022. This plan has been formed with the targeted goal of building a stronger economic future for Canada, making some big changes. To help you understand how this may affect you as a homeowner and investor, we’ve laid out the major changes that will come with this new budget plan.
Tax-Free First Home Savings Account
The new 2022 budget plans to create the Tax Free First Home Savings Account for first time home buyers. Candidates eligible for this will be able to contribute up to $8,000 annually, with a maximum lifetime limit of $40,000. This full annual contribution limit will be available effective 2023.
Home Buyers’ Tax Credit
The budget proposes to double the Home Buyer’s Tax Credit amount to $10,000. While first time buyers can currently obtain up to $750 in tax relief by claiming the First-Time Home Buyers’ Tax Credit, the enhanced credit will provide up to $1,500 in tax relief to eligible home buyers. In addition, spouses or common-law partners will be able to continue splitting the credit as long as the combined tax relief does not exceed $1,500.
An Extended and More Flexible First-Time Home Buyer Incentive
It was announced that Budget 2022 will grant an extension of the First-Time Home Buyer Incentive to March 31, 2025. The Government is currently exploring new options to make the program more flexible and responsive to the needs of first-time home buyers, including single-led households.
Additional Housing Support
There will be a one-time $500 payment provided in 2022 to 2023 to people who are facing housing affordability challenges. No specifics have been revealed on how this payment will be delivered, but details are planned to be announced at a later date.
Ban on Foreign Investment in Canadian Housing
A major change proposed by Budget 2022 are restrictions that would prohibit foreign commercial enterprises and people who are not Canadian citizens or permanent residents from acquiring any non-recreational, residential property in Canada for the next two years. The ban does have some exceptions when it comes to refugees, international students on the path to permanent residency, and individuals on work permits who are residing in Canada.
Multigenerational Home Renovation Tax Credit
Budget 2022 will also introduce a new Multigenerational Home Renovation Tax Credit. This is set to provide up to $7,500 in support for constructing a secondary dwelling unit for a senior or a person with a disability. This credit will be available for the taxation year in which the renovation is completed.
Home Accessibility Tax Credit
Finally, Budget 2022 will double the annual expense limit of the Home Accessibility Tax Credit to $20,000 for the rest of 2022 and subsequent taxation years. Those eligible will be able to receive a credit of up to $3,000. This is an increase from the previous tax credit of up to $1,500, for significant accessibility renovations or alterations for an eligible property.
These are the major changes that have been revealed for the new 2022 budget. As always, you can check out Brunch With REC to hear our thoughts on the new changes along with everything else going on in the world of real estate.