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Housing affordability is a significant concern to many Canadians, especially the younger generation. Residential real estate prices have climbed at a rate that far exceeds the average wage growth making home ownership an unattainable goal for many. To address housing issues, the federal government has announced and implemented various tax measures over the last few years, ranging from increased taxes on residential property flippers to the First-Home Savings Account (FHSA).
If you already own a home and are considering adding a secondary suite for aging parents or a related adult with a disability, the Multigenerational Home Renovation Tax Credit (MHRTC) can offer substantial tax savings.
Learn more about the MHRTC by reading our article, New multigenerational home renovation tax credit may be a hidden gem.
The FHSA, available since 2023, is an account that can accelerate your ability to save for the purchase of your first home. The FHSA allows eligible individuals to make tax-deductible contributions, up to certain limits—much like a Registered Retirement Savings Plan (RRSP). Qualifying withdrawals from an FHSA are not taxable, similar to a Tax-Free Savings Account (TFSA).
As a prospective first-time home buyer, you may be wondering whether it is most beneficial to contribute to the new FHSA, the TFSA, or participate in the Home Buyers’ Plan as part of your RRSP.
Read our article, Q&A: Answering your tax questions on RRSPs, TFSAs, and the new First-Home Savings Account (FHSA) to learn more.
The Underused Housing Tax (UHT) is a 1% tax on vacant or underused residential real estate owned by non-Canadians. If you own residential property in Canada as a foreign owner, you may be impacted by this tax and the related filing requirements.
Due to complexity of the UHT rules and various concessions made by government, read our series of articles on the UHT to gain some clarity, including:
Under the new flipped property rule that came into effect for 2023, a gain from the disposition of a residential property that was owned for less than 365 days is fully taxable as business income, with limited exceptions. This means that the gains on such dispositions would not be eligible for capital gains treatment or the principal residence exemption.
If you’ve sold or are planning to sell residential real estate, read our article, What you need to know about residential property flipping and your income taxes, to understand the income tax implications.
If you own an investment property that is offered for rent on a short-term basis (i.e., less than 90 consecutive days), you should be aware of the proposed changes to deny expense deductions on non-compliant short-term rentals. The proposed effective date is January 1, 2024, with transitional relief available only for 2024. If this could be a concern for you, read our article, Proposal overview: Tax changes to short-term rental expense deductions.
Builders of new residential rental properties may benefit from GST relief on certain new purpose-built residential rental housing. In addition, as a result of a recent Canada Revenue Agency communique, builders may have an opportunity to recover a portion of the GST/HST that was previously self-assessed at the time a newly constructed or substantially renovated residential rental property was first occupied.
Learn more by reading our other articles.
In the 2024 Federal Budget, the government announced new accelerated capital cost allowance (CCA) relief for purpose-built rental buildings. Eligible purpose-built rental projects that begin construction on or after April 16, 2024 and before Jan. 1, 2031, and are available for use before Jan. 1, 2036, would be eligible for accelerated CCA of 10% (increased from 4% under Class 1).
Read our summary of business tax measures included in the 2024 Federal Budget for more details.
Our Tax team can help you stay on top of the most recent tax changes that could impact you and your business. If you have any questions about any of these recent housing tax measures, please contact us.
The information in this publication is current as of May 16, 2024
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.
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