Federal Budget 2022

by Apr 12, 2022Market

Housing Highlights!

The budget is out and I am sure you, like me, what to know where that absurd amount of money I hand over to the government is going to go. I for one, can’t wait for those wine fuelled debates to begin. What I’m sure we can all agree on is that this tax payer money be spent on what’s best for the Canadian people. So… What is best for Canadian people? … That is a loaded question, instead let’s chat about Real Estate. 

The media has been calling it the Great Canadian Affordability Crisis, and no doubt the sky rocketing housing prices, fuelled by all time low interest rates and an even lower housing supply have made it very uncomfortable for all buyers, especially those looking for their first home and those looking to upgrade their living situations. So what did the government include in the budget to help you get your first home? And what are they doing to cool the market? 

What I’m happy to see is that First Time buyers actually have been loud enough to get the attention of these policy makers to be included in the 2022 Federal Budget. 

Highlights for First Time Home Buyers 

  • Doubling of the First Time Home Buyer Tax Credit 
  • A New Tax Free First Home Savings Account 
  • An Extended & More Flexible First Time Home Buyer Incentive
  • More Support for Rent to Own Projects 

The most exciting inclusion to the budget, in my humble opinion is the new Tax Free First Time Home Buyer Savings Account. This would allow up to $40,000 in this new account that will act similar to a RRSP, where the amount will be tax deductible, and a TFSA where the withdrawals and any investment income will be Non Taxable. Let me repeat that, as it’s my favourite combination of words in the English language. NON-TAXABLE. Although $40,000 isn’t much in the way of a down payment for the Toronto market, a combination of two people using this as joint tenancy, or tenants in common is quite exciting. 

The other proposals to the budget includes an increase to existing First Time Home Buyer Tax, Credit, to $10,000, providing a credit up to $1,500. Next, The Home Buyer Incentive, is a temporary program put in place to help eligible buyers to lower buying costs by sharing the cost of buying, with the government, it’s now been extended to March 31st, 2025.  And lastly in the fed’s have budgeted quite a bit of money for Rent to Own Projects, this will largely be done with support to non-for-profits & developers, I’m seriously hoping that this last one looks a lot better then some of the ones I’ve heard about in the past, but I’ll keep a skeptical eye on that one. 

Highlights to Cool the Sizzling Market

  • A Ban on Foreign Investment in the Canadian Market
  • Making Property Flippers Pay Their Fair Share
  • Addressing Money Laundering in the Mortgage Lending Sector 
  • Launching the New Housing Accelerator Fund 
  • Building New Affordable Housing
  • Multigenerational Home Renovation Tax Credit 
  • Building and Encouraging Greener Buildings
  • Direct Support for Those in Housing Need

Alright, so there is a lot here to unpack here so I’ll do my best to keep it simple and quick. I’m personally happy to see that there seems to be a lot on the budget to improve living standards for those in need, namely the indigenous population, and homelessness of veterans. I’m also very happy to see that greener building, retrofits and energy efficiency are on the agenda! Stay tuned for more on these topics in future blog posts. 

Supply! Supply & Supply of housing! Not enough homes are being built and with the amounts of new immigrates coming to the country will only make this reality worse.

The 4 Billion that the government is proposing to develop a Home Accelerator Fund will be aimed at improving the speed of which new homes hit the market. This fund will support municipal governments in their efforts to rapidly build more homes by speeding up the permits and approval processes. My concern here is that the government proposes leveraging the 750 million in transit funding in order to do this. On one hand more homes are desperately needed, on the other, transit is also in desperate need of funding, especially as fuel prices increase and inflation soars. 

The final proposals I want to address in this blog are the ban on foreign investment, which is getting the attention of many critics, who claim it is a misguided attempt to increase supply, as the amount of foreign investors is minimal when you removed the exceptions the government has proposed for this inclusion. Refugees, Permanent Residents and International students on their way to PR have all been excluded in this 2 year ban. I personally believe that this is a sensitive topic that requires more numbers than I have, but what I will say is that every economy requires foreign direct investment to grow, but every Canadian deserves to have a roof over their head before an investor chooses to let their home sit empty. That being said, I would have really loved to have seen somewhere on this budget is an increase in tax multiple properties, perhaps a rising scale on 2nd or 3rd properties and having this additional tax go towards affordable housing, perhaps we will see this in the provincial or municipal budgets. 

As for the crack down on Money Laundering with lenders has me asking just one question… why was this not being done before? 

Well there you have it, a quick run down on the Federal budget for 2022, to read the full budget visit https://budget.gc.ca/2022/report-rapport/chap1-en.html#wb-cont . As we all know these proposals have a way of changing the moment they are proposed, and some are unlikely to see the day of light, but in my ‘Vanilla Latte Fantasy’ the government has every intention of making Canadian housing affordable, at least for some. What are your thoughts.