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On April 7th, 2022, the Federal Government released their new budget – and a large part of that budget was focused on ways to make housing more affordable. Let’s take a look at what their plan is and how that affects the real estate market in Alberta.
One of the biggest issues that we are facing in the real estate market is a supply issue. There is just simply not enough homes to keep up with the demand and the growing population. It is estimated that Canada will need to build 3.5 million homes by 2031 in order to meet the demand.
There are a number of different ways that the government plans on addressing supply issues, and one of those ways is by launching a New Housing Accelerator Fund. It will be an incentive for municipalities and cities to invest in creating more housing.
The government also proposed a Multigenerational Home Renovation Tax Credit. This tax credit would provide up to $7,500 in support for constructing a secondary suite for a senior or an adult with a disability.
Overall, the government has introduced many different strategies they are taking in order to help the housing supply issue.
First Time Home Buyers
First time home buyers are continuing to face large barriers – for many, it is becoming almost impossible to purchase and own a home. The government has introduced a series of new measures that will help.
The government has proposed a Tax Free First Home Savings Account where first time home buyers could easily save for their down payment. Contributions would be tax deductible, and withdrawals to purchase a first home would be non taxable.
The government has also proposed to extend the First Time Home Buyer Incentive. This program was created to help first-time home buyers to lower their borrowing costs by sharing the cost of buying a home with the government.
Reducing Foreign Investment
In recent years, foreign investment has played a big role in the Canadian real estate market. In order to ensure that homes are being bought by Canadians for residential purposes, and not investments, the government has proposed a two year ban on foreign buyers.
Home Flipper Tax
Home flippers are becoming a lot more common in recent years. This is when someone buys a property, renovates it quickly, and then resells for a much higher price. The government has proposed new rules to potentially slow down home flippers, or at the very least, pay more taxes. Anyone that sells a property that they’ve had for less than 12 months will be considered a flipper and taxed in that way – unless under certain life circumstances like a death or new job for example.
These are only a select few points that were mentioned in the 2022 Budget. Overall, the government will be implementing a variety of different measures in an attempt to solve the current housing problem. I would love to hear your thoughts and opinions on the budget – how do you think it will affect the housing market?