First time home buyers:

The federal government has introduced a new program called the First Home Savings account (FHSA) that enables certain home buyers to save up to $40,000 towards a new purchase, with a maximum annual contribution of $8,000 over five years. Any contributions to the FHSA are tax-deductible and withdrawals to purchase a home are tax-free. It is important to highlight, that this program isn’t just for first time home buyers but also for people re-entering the housing market that are currently in the market to buy a home and who haven’t owned one for 4+ years are also eligible.  

Multigenerational Home Renovation Tax Credit:

A form of refundable tax credit providing up to $7,500 “in support for constructing a secondary suite for a senior or an adult with a disability to live with family members”. Eligible families can claim 15 percent of a maximum $50,000 in home renovation and construction costs to build a secondary housing suite.  

Tax on Residential Property Flipping:

Based on a new ruling that was brought in light of the 2022 Budget, there has been significant changes on tax consequences of home-flipping.  

Under this new ruling, the government will assume that anyone who sells a home after possessing it for less than 12 months will be considered to be flipping the property. Any profits from the sale would be considered business income, and not a capital gain. This will help the government increase and tighten some of the measures related to the housing prices and eventually combat the rising house prices.  

However, there are a number of exceptions to this rule – such as selling a home because of a death, divorce, change of job, etc.  

Underused Housing Tax (UHT) – Vacant Property by Non-Resident Owners:

The introduction of the UHT is a national tax that is capped at 1% annually on the value of the vacant and underused residential property in Canada owned directly or indirectly by a non-resident or non-Canadian”.  

Essentially, any non-resident or any non-Canadian who owns a underused or vacant residential property in Canada as of December 31, 2022 will have to file a UHT return for the property by April 30, 2023. There are a number of exceptions to the UHT such as exceptions for seasonal properties and properties made inaccessible by a hazard. Experts believe that over the course of time, rates of the UHT might increase.  

Other Notable Changes:

• Personal Income Tax and Tax benefits have been increased by roughly 6.3% (higher jump than usual)
• Basic Personal Amount has increased to $15,000 from $14,398