The federal government has made several changes to taxes and benefits for this year – and experts tell CBC News that the tax changes related to housing are the ones to watch.
The First Home Savings Account (FHSA), the increase in the home equity tax and the tax on unused or unused housing, are some These are the new systems that are now being implemented.
First Home Loans
The FHSA allows some homebuyers to save up to $40,000 on a home purchase, with a maximum annual contribution of $8,000 over five years. Contributions to the FHSA are tax-deductible and withdrawals to buy a home are tax-free.
Hugh Woolley, a registered professional accountant in Vancouver, says it’s important to note that the FHSA isn’t just for first-time home buyers. Homebuyers who have not owned a home for four years or more are eligible.
“This can also be done for people who are re-entering the housing market, who have been out of the housing market for many years,” said Woolley.
Another new tax benefit related to housing is the Multigenerational Home Renovation Tax Credit.
The tax refund will provide up to $7,500 “to support the construction of a two-bedroom apartment for a senior or disabled adult to live with family members,” the Finance Canada said in an email.
Eligible families can claim 15 percent of the maximum $50,000 for home renovation and construction costs to build a second home.
New tax on flip houses, vacant houses
The government introduced a new law in the 2022 Budget that improves taxes on the house.
The change means that the government will consider anyone who buys a home after owning it for at least 12 months to be flip the field. Profits from the sale will be considered business income, not capital gains.
Dan Rogozynski, the vice-chancellor of the University of Waterloo, said that the government hopes that the slowdown in housing prices in Canada will help.
“They don’t like this turnover, because what happens is that it creates demand, it increases prices,” said Rogozynski.
But the change comes with many exceptions, such as selling a house due to a death or divorce.
According to Woolley, it is likely that the builders will find ways to get around to pay the tax.
“I think a lot of people will sell it within a year [and] it is still possible to find a reason why these laws are not applied to them,” he said.
The government is also introducing Unused Buildings Tax (UHT).
“The UHT is a national, one percent annual tax on the value of the occupancy and non-use of residential property in Canada owned directly or indirectly by a non-resident, non-Canadian,” Finance said. Canada in an email.
Any non-resident, non-Canadian who owns a home or is not in Canada as of December 31, 2022 must file a UHT return for the property by April 30, 2023.
There are several exceptions to UHT. This includes exemptions for temporary property and property that cannot be acquired by a hazard.
Woolley says many of the exceptions to UHT are notable.
“I think one of the dangers with these laws is that the more exemptions you give, the more taxpayers and smart, gullible people will say, ‘Well, this is the way. you use these rules,'” Woolley said.
Rogozynski said the tax will likely increase in the next few years.
“I don’t know why this ratio does not go to 1 percent, to 2 percent, to 3 percent, because there are no names, no faces, no votes,” he said. this.
The federal government is targeting personal income tax cuts and more tax benefits to inflation. They will increase by 6.3 percent this year, said the Canada Revenue Agency.
Rogozynski said it was a higher jump than usual.
“That’s three times what you’d normally see 40 years ago,” he said.
“Pretty much everyone who’s working in Canada right now probably hasn’t seen any sign of racism happening.”
The Basic Personal Amount, the amount of tax-exempt income, has increased to $15,000 this year, from $14,398 in 2022.
Rogozynski said, overall, the tax changes this year are modest.
“Maybe there’s something wrong [in 2023]. That is not the time to introduce many new additions,” he said.