6 Ways The Government Of Canada Is Making Housing Affordable For First-Time Homebuyers
The cost of living in Canada has certainly skyrocketed, and with the effects of the rise of inflation being felt everywhere, it might often feel impossible to ever buy your first property.
Well, following the federal 2022 budget, the Government of Canada has stated its plans to make housing in Canada more affordable for young people and first-time homebuyers.
Minister of Finance Chrystia Freeland tweeted on April 13 that "housing is a basic human need."
"We need to ensure that everyone in Canada has a safe place to call home. #Budget2022 puts forward the most ambitious plan Canada has ever had to solve this fundamental challenge," she wrote.
Housing is a basic human need. We need to ensure that everyone in has a safe place to call home. #Budget2022 puts forward the most ambitious plan has ever had to solve this fundamental challenge. These are timely and important steps to build the homes that Canadians need.pic.twitter.com/amOvlogm3G— Chrystia Freeland (@Chrystia Freeland) 1649903771
The government has since announced a number of new programs along with existing rebates and incentives in place to help first-time homebuyers, some of which can definitely help you get in on the real estate action.
First-Time Home Buyer Incentive
Canada announced that it would be extending the First-Time Home Buyer Incentive until 2025, allowing young Canadians to take advantage of the program for longer.
The incentive is a shared-equity mortgage with the Government of Canada that lends 5 to 10% toward a first-time buyer's purchase of a home, depending on the home type. You then pay the government back the same percentage of the value of your home when you sell it.
"This means that the government shares in the upside and downside of the property value," the government explains on its website.
First-Time Home Buyers' Tax Credit
The First-Time Home Buyers' Tax Credit, officially known as the home buyers' amount, currently "offers a $5,000 non-refundable income tax credit amount on a qualifying home acquired during the year," according to CMHC.
The proposed update would double that amount to $10,000 for homes purchased as of January 1, 2022, which could provide up to $1,500 of tax relief for those who are eligible.
Home Buyers' Plan
The Home Buyers' Plan is another program available to eligible Canadians that allows you to withdraw from your RRSP in order to buy your first qualifying property.
According to the government, the program "allows you to withdraw up to $35,000 in a calendar year from your RRSPs to buy or build a qualifying home for yourself or for a related person with a disability."
GST/HST Housing Rebate
The GST/HST Housing Rebate allows Canadians to receive funds back on some of the GST and HST paid for a new or renovated home.
The federal government states that those who are eligible "may qualify for a rebate of part of the GST or HST that you paid on the purchase price or cost of building your new house, on the cost of substantially renovating or building a major addition onto your existing house, or on converting a non-residential property into a house."
This particular program is not available to a corporation or a partnership.
Canada Greener Homes
Canada is trying to tackle climate change with the Canada Greener Homes grant that helps Canadian homeowners improve the energy efficiency of their homes, allowing them to reduce the cost of their energy bills.
Homeowners can receive up to $5,000 for eligible energy-efficient retrofits made to their homes and up to an additional $600 for EnerGuide evaluations.
Tax-Free First Home Savings Account
The Tax-Free First Home Savings Account was introduced as part of the 2022 federal budget, which would give first-time homebuyers the chance to save up to $40,000 (maximum $8,000 per year) completely tax-free.
Considering down payments are one of the biggest hurdles when it comes to buying your first home, eligible Canadians would be able to open these new tax-free savings accounts to help them achieve their down payment cost goals faster.
Similar to an RRSP, deposits made into the Tax-Free First Home Savings Account would be tax-deductible. And, like a TFSA, money taken out — including interest earned — would be non-taxable.
The government plans to make the account available sometime in 2023.
This article's cover image was used for illustrative purposes only.
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