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20 Mar

Federal Budget 2019 – An Affordable Place to Call Home (Summary)

General

Posted by: Croydon DeMello

 

The First Time Home Buyer Incentive

  • Canada and Mortgage Housing Corporation (CMHC) would provide up to $1.25 billion over three years starting in 2019-20 to eligible home buyers by contributing towards your down payment and taking an equity stake in your home
  • participant’s down payment must be a minimum of 5% and less than 20%
  •  you can get 10% toward a newly constructed home and 5% toward an existing home
  • annual household income must be under $120,000
  • participant’s insured mortgage and the CMHC incentive cannot be more than four times the participant’s annual household income
  • on average this can lower your monthly mortgage payment by $228
  • repayment terms to be disclosed later this year
  • program operational by September 2019

 

Modernizing the Home Buyers’ Plan

  • Currently First Time Home Buyers can withdraw up to $25,000 from their Registered Retirement Savings Plan (RRSP) without paying any withdrawal tax and this has not been adjusted for 10 years
  • Budget 2019 proposes to increase the withdrawal limit to $35,000 effective March 19, 2019
  • Standard repayment terms remain in effect
  • Individuals that experience a breakdown of a marriage or common-law partnership are now permitted to participate even if they do not meet the first-time home buyer requirement

 

Expanding the Rental Construction Financing Initiative

  • Budget 2019 proposes to provide an additional $10 billion over nine years to help provide low cost loans to companies to help construct new rental housing for modest and middle income Canadians

 

Encouraging Innovation With the Housing Supply Challenge

  • Budget 2019 proposes to provide $300 million to invite municipalities and other stake holder groups across Canada to propose new ways to break down barriers that limit the creation of new housing and to also build the right kind of housing along with accessibility and proximity to amenities

 

Launching an Expert Panel on the Future of Housing Supply and Affordability 

  • The Expert Panel will consult with stakeholders to identify and evaluate measures that could build on recent investments and initiatives to increase the supply of housing in British Columbia to meet demand
  • Budget 2019 proposes that CMHC invest a total of $9 million to support the work of the Expert Panel, state-of-the-art housing supply modelling and related data collection to better understand housing challenges and solutions

 

Delivering on Canada’s First National Housing Strategy

  • Budget 2019 proposes to introduce new legislation which requires the federal government to maintain a National Housing Strategy that prioritizes the housing needs of the most vulnerable
  • ‘Reaching Home’ a new $2.2 billion program to prevent and reduce homelessness will launch on April 1, 2019 with a goal to reduce chronic homelessness by 50%
  • Canada Housing Benefit will provide $4 billion for financial relief directly to those in core housing

 

Taking Action to Enhance Tax Compliance in the Real Estate Sector

  • The Canada Revenue Agency (CRA) will use advanced risk assessment tools, analytics, third-party data and collaboration with the provinces and territories to share information to detect real estate transactions that have not paid taxes
  • recent efforts have uncovered more than $100 million  of additional taxes
  • Budget 2019 proposes to provide the CRA with $50 million over five years to create four new dedicated residential and commercial real estate audit teams
  • Ensure taxpayers report all sales of their principal residence on their tax returns
  • Ensure any capital gain derived from a real estate sale, where the principal
    residence tax exemption does not apply, is identified as taxable
  • Ensure money made on real estate flipping is reported as income
  • Ensure commissions earned are reported as taxable income
  • Ensure Goods and Services Tax/Harmonized Sales Tax (GST/HST) purposes,
    builders of new residential properties remit the appropriate amount of tax
    to the CRA

 

Deterring Financial Crime in Real Estate

  • Strengthened enforcement framework to deter mortgage fraud and money laundering

 

Monitoring Purchases of Real Estate

  • Budget 2019 proposes to provide Statistics Canada up to $1 million over two years to conduct data collection and assessment to help monitor tax compliance and money laundering which can drive up housing costs