by Peter Squire
The Federal Budget 2019 was released on Tuesday, and The Canadian Real Estate Association (CREA) welcomed the introduction of various measures to help address housing affordability and provide meaningful support for Canadians. It’s a nice acknowledgement of REALTORS® who have been ceaselessly advocating on behalf of millennials and others who aspire to homeownership but have been struggling to reach their goal amid a challenging environment.
CREA commended the Government of Canada for supporting homeownership by including the following measures in Budget 2019:
• First-Time Home Buyer Incentive. This program will allow Canadians to purchase a home and lower their monthly payments by sharing the cost of the mortgage with the government. The incentive will provide 5% or 10% of the cost for eligible home buyers. Canada Mortgage and Housing Corporation (CMHC) will receive $1.25 billion over three years to administer this new program. Terms and conditions will be released in the coming months and the program is expected to be operational by September 2019.
• Increasing the Home Buyers’ Plan (HBP) withdrawal limit from $25,000 to $35,000. The increase to $35,000 will allow home buyers greater access to their own savings to purchase a home. To date, the HBP has helped over 2.9 million Canadians achieve homeownership.
• Expanding eligibility for the HBP during significant life changes. Expanding the use of the HBP is a fiscally-conscious way to help Canadians maintain homeownership after experiencing a breakdown in their marriage or common-law partnership.
• Impact of Mortgage Rate Stress Tests. The government will continue to monitor the effects of its
mortgage finance policies and adjust them if economic conditions warrant. This will ensure Canadians can responsibly access housing while safeguarding the stability of the economy.
• Increasing Housing Supply Through Partnerships and Targeted Investments. The government continues to support the Rental Construction Financing Initiative launched in 2017. An additional $10 billion will be invested over the next nine years and the program will be extended until 2027-28. This investment will support the construction of 42,500 rental units across the country.
• Housing supply challenge. The government is launching a challenge to municipalities and other stakeholders to identify innovative ways to break down barriers that limit the construction of housing supply. More information on the challenge will be released in summer 2019.
• Reviewing Housing Supply and Affordability. On March 15, 2019, the Minister of Finance Canada, along with British Columbia’s Finance Minister, and the Minister of Municipal Affairs and Housing, launched an expert panel to discuss and provide recommendations on the future of housing supply and affordability. Budget 2019 will invest funds to support this initiative.
• National Housing Strategy. Launched in Budget 2017, the National Housing Strategy is a $40 billion
investment in affordable housing. The government is proposing to introduce legislation that would require the federal government to maintain the National Housing Strategy and require regular reporting on the progress to Parliament.
• Increasing fairness by strengthening rules and compliance. The Canada Revenue Agency (CRA) will be creating four new audit teams dedicated to residential and commercial real estate in high-risk regions. This will ensure that real estate tax provisions will be respected and will focus on:
~ Sale of principal residence is reported on tax returns;
~ Capital gain from a real estate sale is accurately reported as taxable income (principal residence tax exemption still applies);
~ Money made on real estate flipping is reported as income;
~ Commissions earned are reported as taxable income;
~ GST/HST on new residential properties is properly remitted to the CRA.
• Deterring Financial Crime in Real Estate. The
Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) will increase their examinations in the real estate sector to improve detection of money laundering activities in real estate transactions.
• Improving Energy Efficiency. To increase energy efficiency for residential and commercial buildings, the government will assign $1.01 billion to the Federation of Canadian Municipalities through the Municipal Green Fund.
“Millennials are passionate about owning their own home, but many are worried they will never be able to because of higher home prices and tougher mortgage qualifying rules,” said Barb Sukkau, CREA’s President. “REALTORS® have been advocating for the modernization of the HBP and are pleased to see it addressed in Budget 2019. The measures announced today will help today’s millennials in a tangible way, while also addressing some longer-term concerns related to housing supply and sustainability.”
The economic and social benefits of homeownership are important within Canadian society. The housing sector makes a significant contribution to the
Canadian economy. Resale housing transactions through the MLS® generated an estimated $31.7 billion in spin-off spending and created more than 216,000 jobs in 2018. For most, a home is the single largest financial investment of their life and an important piece of their retirement planning.
CREA congratulates its REALTOR® members, boards, and associations who brought the message of millennial homeownership and housing affordability to their Members of Parliament during PAC Days, and who tirelessly reinforced this message well into fall and winter. Their united, disciplined approach framed the agenda heading into Budget 2019. Tuesday’s announcement is a win for millennial home buyers and all Canadians who aspire to homeownership.