Federal Budget 2022: Canada plans to ban non-Canadians from buying property for next 2 years

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Here is how it will impact your home buying plans

The federal government unveiled its highly-anticipated spring budget on Thursday, with a focus on trying to make life more affordable for Canadians, the Budget 2022 has introduced a series of measures for the first time home buyers or those looking for affordable housing including banning foreign buyers from purchasing properties, introducing incentives to build secondary suite for adults with disability, fully taxing gains if you sell property within 12 months of your purchase etc.

According to finance minister Chrystia Freeland, for years, foreign money has been coming into Canada to buy residential real estate, fuelling concerns about the impact on costs in cities like Vancouver and Toronto, and worries about Canadians being priced out of the housing market in cities and towns across the country. “To make sure that housing is owned by Canadians instead of foreign investors, Budget 2022 announces the government’s intention to propose restrictions that would 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.”

Here are other measures that will impact your future buying and selling plans:

Tax-Free First Home Savings Account: Tax-Free First Home Savings Account that would give prospective first-time home buyers the ability to save up to $40,000. 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.

Launching a New Housing Accelerator Fund:With the target of creating 100,000 net new housing units over five years, Budget 2022 proposes to provide $4 billion over five years, starting in 2022-23, to launch a new Housing Accelerator Fund.

Rapidly Building New Affordable Housing: The budget proposes to provide $1.5 billion over two years, starting in 2022-23, to extend the Rapid Housing Initiative. This new funding is expected to create at least 6,000 new affordable housing units, with at least 25 per cent of funding going towards women-focused housing projects.

First-Time Home Buyer Incentiveextension to March 31, 2025

Taxing Property flipping: To ensure profits from flipping properties are taxed fully and fairly, Budget 2022 proposes to introduce new rules so that 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, applying to residential properties sold on or after January 1, 2023. Exemptions would apply for 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.

Supporting Rent-to-Own Projects: To help develop and scale up rent-to-own projects across Canada, Budget 2022 proposes to provide $200 million in dedicated support under the existing Affordable Housing Innovation Fund.

Moving Forward on a Home Buyers’ Bill of Rights: The government will engage with provinces and territories over the next year to develop and implement a Home Buyers’ Bill of Rights and bring forward a national plan to end blind bidding. Among other things, the Home Buyers’ Bill of Rights could also include ensuring a legal right to a home inspection and ensuring transparency on the history of sales prices on title searches.

Multigenerational Home Renovation Tax Credit:To provide up to $7,500 in support for constructing a secondary suite for a senior or an adult with a disability, starting in 2023.

Direct Support for those in Housing Need: Budget 2022 proposes to provide $475 million in 2022-23 to provide a one-time $500 payment to those facing housing affordability challenges, with the details and delivery method to be announced at a later date.

Doubling the First-Time Home Buyers’ Tax Credit to $10,000, providing up to $1,500 in direct support to home buyers, applying to homes purchased on or after January 1, 2022.

Doubling the Home Accessibility Tax Credit to $20,000 for the 2022 and subsequent tax years. This will mean a tax credit of up to $3,000—an increase from the previous tax credit of up to $1,500—for important accessibility renovations or alterations.