By Jeremy Davis
In previous Market Matters columns, we’ve highlighted both the City of Winnipeg and the Government of Manitoba budgets because each level of government’s spending plans can have a real impact on current and prospective homeowners. Now we shift our attention to the federal government because, earlier this week, Budget 2023 was tabled. Following are some highlights of the housing policies and measures that were included, and some measures from Budget 2022 which have come into force.
On March 28, 2023, Budget 2023: A Made-in-Canada Plan — Strong Middle Class, Affordable Economy, Healthy Future, was presented to the House of Commons, and a number of measures related to housing were included.
The federal government announced its intention to support the reallocation of funding from the National Housing Co-Investment Fund’s repair stream to its new construction stream in an effort to accelerate the construction of affordable homes.
An additional $4 billion to the Canada Mortgage and Housing Corporation (CMHC) was proposed for the implementation of a co-developed Urban, Rural and Northern Indigenous Housing Strategy.
A guideline will be published through the Financial Consumer Agency of Canada to safeguard Canadians with existing mortgages who are in exceptional circumstances, and ensure federally regulated financial institutions provide fair and equitable access to relief measures. Examples include extended amortizations, adjusted payment schedules, or authorizing lump-sum payments.
The creation of a low-cost flood insurance program was proposed with $31.7 million over three years which would be aimed at protecting households with a high flood risk and without access to adequate insurance.
An additional $15.3 million over three years was proposed to create an online portal for Canadians to gain information about their exposure to flooding.
The government announced its intention to consult on the required changes to remove regulatory barriers for home buyers from diverse communities seeking access to alternative financing products.
As with all these outlined plans, more details on all of the housing-related measures introduced as part of Budget 2023 are anticipated.
Here are the housing related measures that were released in Budget 2022, and which have since come into force:
• Budget 2022 increased the amount used to calculate the First-Time Home Buyers’ Tax Credit to $10,000 (from $5,000), which would provide a tax credit of up to $1,500 to eligible home buyers. This amendment applied to the 2022 and subsequent taxation years.
• The two-year ban on non-Canadians purchasing residential property came into force on January 1, 2023, after the federal government released the regulation on December 21, 2022. Regulations includes definitions, exceptions, and enforcement elements to help individuals understand and comply with the law. Amendments have since been introduced which include:
- Enabling more work permit holders to purchase a home to live in while working in Canada;
- Repealing existing provision so the prohibition doesn’t apply to vacant land;
- An exception for development purposes; and,
- Increasing the corporation foreign control threshold from 3% to 10%.
• The Multigenerational Home Renovation Tax Credit is a refundable credit that allows families to claim up to $7,500 to build a secondary unit in their home to accommodate seniors or adults with disabilities.
• Budget 2022 introduced a new rule to ensure profits made from flipping residential real estate are subject to full taxation. Specifically, profits arising from dispositions of a residential property (including a rental property) that was owned for less than 12 months would be deemed to be business income.
• The Tax-Free First Home Savings Account (FHSA) is designed to give first-time home buyers the ability to save $40,000 on a tax-free basis with an annual contribution limit of $8,000. Financial institutions will be able to start offering the Tax-Free First Home Savings Account (FHSA) to Canadians as of April 1, 2023.
Through the work done by our partners at the Canadian Real Estate Association (CREA), the housing sector has received the attention it deserves at the federal level in recent years. Access to housing and housing affordability continue to be issues that are top of mind for Canadians and while much more work is needed, we commend the work done to date.
When it comes to housing, REALTORS® will continue to devote time and effort towards advocating on behalf of current and prospective homeowners, and the real estate industry as a whole.
Jeremy Davis is the Winnipeg Regional Real Estate Board’s Director External Relations & Market Intelligence.