The government of Canada is making it easy for Canadians and newcomers alike to buy a home. The Canadian government said it would loosen some of the rules in an Act that made it hard for people who were not Canadian to buy homes.
Also, as of April 1, banks can now offer first-home savings accounts that don’t have to be taxed. This makes a plan from the Budget 2022 plan come true.
Non-Canadians can buy homes with fewer restrictions.
A few months after making a new law that says non-Canadians can’t buy homes, the government changed it and made it easier for people with work permits to buy homes in Canada.
The Prohibition on the Purchase of Residential Property by the Non-Canadians Act was changed on March 27. This was stated by the Canada Mortgage and Housing Corporation (CMHC).
Under the updated Act, non-Canadians with a work permit can also buy land that can be used for both residential and business purposes if they meet specific requirements. When the changes were announced, they went into action right away.
CMHC says that people with work permits are now eligible if they have at least 183 days left on their work permit or work license when they buy a home. Also, they have bought only one place to live in Canada.
The Act said that residential property includes separate homes or similar buildings, semi-detached houses, rowhouse units, residential condominium units, and other similar places.
Also, the rule that applied to land that was not being used has been changed. Land zoned for residential and mixed-use but empty can now be bought by non-Canadians and used for any reason, including building homes.
No longer do tax returns have to be shown as proof.
The current rules about paying taxes and having worked in Canada before are being thrown out. In the original Act, it was still legally possible for people with work or study permits to buy a home in Canada, but they had to meet several requirements. Mainly, anyone in Canada with a work permit had to:
- Have worked in Canada for at least three years in the four years before the year the purchase was made if the work was full-time as defined in subsection 73(1) of the Immigration and Refugee Protection Regulations (IRPA).
- Had filed all income tax forms required by the Income Tax Act for at least three of the four tax years before the year the purchase was made,
- Have not bought more than one home.
First Home Savings Account (FHSA):
In the Budget for 2023, it was said that the new tax-free First Home Savings Account (FHSA) would be open for business. It was first suggested in the federal government’s budget for 2022, and as of April 1, 2023, Canadians can start getting this plan from their banks.
The plan lets people who want to buy their first home save up to $40,000 without paying taxes. The most you can put into the account each year is $8,000. Like a Tax-Free Savings Account, contributions to the plan will be tax-deductible, and payments to buy a first home will not be taxed.
The Canadian government’s plan to make housing more affordable includes the First House Savings Account, which helps Canadians save for a down payment on their first house. The government thinks that the FHSA will give $725 million in help over the next five years.
For members to be able to open an FHSA, they must be:
- A Canadian person who is at least 18 years old
- A first-time buyer of a house
The account can stay open for 15 years or until the end of the year when the participant turns 71, or until the end of the year after the first year in which a qualified exit is made from an FHSA for a first home purchase, whichever comes first.
Cost of a Home in Canada
According to data from the Canadian Real Estate Association (CREA), the real (not adjusted for seasons) national average home price was $662,437 in February 2023. This was 18.9% less than the all-time high set in February 2022.
More data from March 2023 show that home sales across the country have increased by 2.3% since February, even though the number of newly listed homes has decreased by almost 8% in the same period.
Home prices stay mixed across Canada. CREA says, “With significantly higher borrowing costs, it’s not surprising that prices have mostly gone down from their peaks in Ontario and British Columbia’s more expensive markets.”
Alberta, Saskatchewan, Newfoundland, and Labrador have all seen improved prices. Quebec and the Maritime provinces are in the middle. In 2023, the average national home price will drop by 5.9% each year.
Summary:
- The Canadian government has relaxed the Act’s limitations on non-Canadians buying a property with work permits.
- The revised Act allows non-Canadians with work permits to buy land for residential and commercial usage if conditions are met.
- On April 1, 2023, the tax-free First Home Savings Account (FHSA) allowed Canadians to save up to $40,000 to buy their first home.
- Participants in the FHSA scheme must be Canadian, 18 years old, and first-time home buyers to receive $725 million in housing affordability assistance over five years.
- The national average home price was $662,437 in February 2023, 18.9% below the all-time high, while home values remain mixed across Canada, with predicted annual decreases of 5.9% in 2023.
