How the Federal Budget Impacts Homeowners
The federal government delivered its long-awaited budget last month — the first in more than two years — which included several measures related to the real estate market, homebuyers and sellers. Here are three key items that have been promised.
1. Tax credits to encourage home energy efficiency retrofits. Interest-free loans worth up to $40,000 will be available to homeowners and landlords who undertake retrofits identified through an authorized EnerGuide energy assessment. They include replacing oil furnaces or low-efficiency systems with a high-efficiency furnace, air source heat pump or geothermal heat pump; better wall or basement insulation and/or wall or roof panels; installing a high-efficiency water heater or on-site renewable energy like solar panels; and replacing drafty windows and doors, among other initiatives to make homes greener. The program is expected to be available by summer.
2. An annual 1% tax on the value of foreign-owned vacant or underused property, effective Jan. 1, 2022. The government will release a consultation paper in the coming months to provide stakeholders with an opportunity to comment on the parameters of the proposed tax.
3. A relaxation of conditions for the GST/HST New Housing Rebate, which entitles homebuyers to recover 36% of the GST/HST paid on the purchase of a newly built or substantially renovated home with a pre-tax price less than or equal to $350,000. The rebate will now be available if the new home is acquired for use as the primary residence of any one of the purchasers or a relative. Prior to this, the rebate could only be accessed if the new home was the primary residence for each joint purchaser.
The budget is equally significant for what the government chose not to include, as it relates to real estate. Despite rumours leading up to the budget announcement, there was no change to the capital gains tax exemption on the sale of principal residences. As well, in the face of rapid home price increases, the government decided to take a wait and see approach to the country’s housing market instead of stepping in to cool it.