As the housing market continues to evolve, several government policies introduced in recent years have shaped the way Canadians buy, sell, and invest in real estate. Here’s an updated overview of these policies and what they mean for Calgary buyers and sellers.
Anti-Flipping Tax
Starting January 1, 2023, the Government of Canada implemented an Anti-Flipping Tax to ensure that profits from properties held for less than 12 months are fully taxed as business income. This measure includes certain exceptions for unexpected life events, such as death, divorce, or disability.
What It Means for You:
For buyers: If you’re purchasing a property, understand that sellers may face higher taxes on quick resales.
For sellers: If you’ve owned your property for less than 12 months, consult a tax professional to determine if your sale qualifies for an exception.
Speculation Tax (GST/HST on Assignment Sales)
Effective May 7, 2022, GST/HST now applies to all assignment sales of newly constructed or substantially renovated residential properties. An assignment sale occurs when a purchase agreement is resold before the property has been completed or occupied.
What It Means for You:
For buyers: Ensure that assignment sales are transparently priced to account for this tax.
For investors: Understand the tax implications before engaging in pre-construction flipping.
Vacant Home Tax
The federal government introduced a 1% annual tax on foreign-owned underused housing to help increase housing availability for Canadians. This tax applies to certain properties owned by non-residents that are not occupied or rented out for most of the year.
What It Means for You:
For foreign owners: Review reporting deadlines and ensure compliance to avoid penalties.
For local buyers: This policy aims to increase housing availability by discouraging long-term vacancies.
Foreign Buyers Ban
A two-year ban on the purchase of Canadian residential properties by non-residents came into effect on January 1, 2023. This policy aims to prioritize homeownership opportunities for Canadians and curb speculative investments.
What It Means for You:
For buyers: Increased competition from foreign buyers may resume when the ban expires in January 2025. Stay informed about potential changes to this policy.
For sellers: The ban may impact demand in certain segments of the market, particularly high-value homes.
Benefits for Buyers in 2024
First-Time Home Buyers’ Tax Credit
This credit has been doubled, providing up to $1,500 in direct support to first-time home buyers to help offset closing costs.
What It Means for You:
If you’re a first-time buyer, ensure you’re claiming this benefit during tax season to reduce your overall costs.
Multigenerational Home Renovation Tax Credit
This refundable tax credit offers up to $7,500 for constructing a secondary suite for a senior family member or an adult with a disability.
What It Means for You:
Consider this credit when planning renovations to accommodate family needs or enhance your property’s value.
Tax-Free First Home Savings Account (FHSA)
Introduced in 2023, the FHSA allows Canadians to save up to $8,000 annually toward purchasing their first home. Contributions are tax-deductible, and withdrawals for qualifying home purchases are tax-free.
What It Means for You:
If you’re planning to buy your first home, take advantage of this account to maximize your savings.
Unlike the Home Buyers’ Plan (HBP), you don’t need to repay withdrawals, even if not used for a home purchase (though such withdrawals are taxable).
How These Policies Impact the Calgary Market
These measures aim to make housing more affordable and accessible while curbing speculative practices. In Calgary:
Anti-Flipping Tax: Helps reduce short-term speculation in the city’s fast-paced market.
Foreign Buyers Ban: Keeps more properties available for local buyers.
Vacant Home Tax: Targets underutilized properties, particularly in areas with high vacancy rates.
Benefits for Buyers: Provides financial relief and incentives, especially for first-time buyers and families considering multigenerational living.
Want to Learn More?
Our team at Greater Calgary Real Estate is here to help you navigate these policies and find the best opportunities in Calgary’s housing market.
Contact us today to discuss how these policies affect your buying or selling plans.
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