Proposed Federal Budget 2022, released on April 7th, acknowledges that “housing supply has been unable to keep up with demand” and “(w)ith inventories at record lows, house prices have rapidly increased across the country …, making affordability a real concern.” The Liberals and NDP have indicated support for the proposed budget and they together form a majority in the House of Commons; accordingly, the proposed Budget is almost certain to be adopted.
The following are highlights from the Budget that have the potential to impact mortgage brokers the most. Although the first item was at the end of the list in the budget, we have moved it to the top given its potential significance to mortgage brokers.
Protecting Canadians From Money Laundering in the Mortgage Lending Sector - “To help prevent financial crimes in the real estate sector, the federal government is announcing its intention to extend anti-money laundering and anti-terrorist financing requirements to all businesses conducting mortgage lending in Canada within the next year.” [Note: This may trigger a number of challenges, including whether the federal government has the jurisdiction/authority to impose such requirements onto provincially regulated entities. Time and the outcome of almost certain court actions will tell.]
New Housing Accelerator Fund - would “provide $4 billion over five years, starting in 2022-23, to the Canada Mortgage and Housing Corporation to launch a new Housing Accelerator Fund. … This new fund will target the creation of 100,000 net new housing units over the next five years.”
Tax-Free First Home Savings Account - 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.”
Doubling the First-Time Home Buyers’ Tax Credit - would “double the First-Time Home Buyers’ Tax Credit amount to $10,000. The enhanced credit would provide up to $1,500 in direct support to home buyers.” “This measure would apply to homes purchased on or after January 1, 2022.”
An Extended and More Flexible First-Time Home Buyer Incentive - would extend “the First-Time Home Buyer Incentive to March 31, 2025”
Multigenerational Home Renovation Tax Credit - would “introduce a Multigenerational Home Renovation Tax Credit, which would provide up to $7,500 in support for constructing a secondary suite for a senior or an adult with a disability. … Starting in 2023, this refundable credit would allow families to claim 15 per cent of up to $50,000 in eligible renovation and construction costs incurred in order to construct a secondary suite.”
Moving Forward on a Home Buyers’ Bill of Rights - would "provide $5 million over two years, starting in 2022-23, to the Canada Mortgage and Housing Corporation” … “to 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.” Ban on Foreign Investment in Canadian Housing - government intends “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.” Making Property Flippers Pay Their Fair Share -“proposes to introduce new rules to ensure profits from flipping properties are taxed fully and fairly. Specifically, any person who sells a property they have held for less than 12 months would be considered to be flipping properties and would be subject to full taxation on their profits as business income. 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.”
Taxing Assignment Sales - “proposes to make all assignment sales of newly constructed or substantially renovated residential housing taxable for GST/HST purposes, effective May 7, 2022.”
A number of other items in the Budget are stated to target the infrastructure so as to make building housing quicker and easier. Will the budget have any significant impact on addressing the housing supply and prices? Some will think there is hope and others will think such ‘hope’ is but wishful thinking.
See the full budget HERE