New 2023 Canadian Government Regulations for Real Estate
1. Prohibition on the Purchase of Residential Property by Non-Canadians Act
Starting January 2023, non-Canadians will be banned from buying homes across Canada. The Act prohibits non-citizens and non-permanent residents and persons not registered under the Indian Act from purchasing residential property in Canada for two years. The act also applies to corporations based in Canada that are: privately held, not listed on Cdn Stock Exchange, and controlled by someone who is non-Canadian ( carrying 3% or more voting rights). Exemptions from the ban include Canadian citizens & permanent residents, international students who meet certain requirements, diplomats, consular staff, members of international organizations living in Canada, and more. Additional rules and exemptions may apply.
2. Residential Property Flipping Rule (Federal)
Individuals who purchase a residential property and sell it within 12 months of their purchase may be subject to the Residential Anti-Flipping Rule. Under the new rules, any profit from the sale of residential real estate (including rental property) within a year would be taxed as business income and ineligible for either the 50% capital gains rate or the principal residence exemption and therefore taxed at 100% of the capital gains. Exemptions may apply.
New 2023 Canadian Government Incentives for Real Estate Buyers
3. Multigenerational Home Renovation Tax Credit (Federal)
Tax credit for families applies to eligible construction costs for those who wish to add a self-contained secondary unit to their home for an immediate or extended family member. To be eligible, the renovation must be completed in the owner’s primary residence where they live with a senior (65+) or adult living with a disability. The tax credit covers 15% of incurred costs to a maximum of $7,500. Exemptions may apply.
4. Tax-Free First Home Savings Account (FHSA, Federal)
A newly registered plan that gives prospective first-time homebuyers the ability to save $40,000 for the purchase of their first home on a tax-free basis. This plan is similar to a Registered Retirement Savings Plan (RRSP), where contributions are tax deductible and also comparable to a TFSA where income, losses and gains in respect of investments held within an FHSA would not be included (or deducted) in computing income for tax purposes. With this plan, Canadians may be able to open and contribute up to an $8,000 annual contribution limit, with a lifetime contribution limit of $40,000 to their FHSA. This is a proposed plan for 2023 and is not in effect yet. Exemptions & conditions may apply.
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