(MENAFN- Caribbean News Global) By edana robitaille and julia hornstein
MONTREAL, Canada (CIC NEWS) – Canada's government is making it easier for newcomers, as well as Canadians, to purchase a home.
Last week, the government announced it was reducing some of the restrictions of an Act that made it difficult for non-Canadians to purchase residential property. Also, as of April 1st, financial institutions are now able to offer tax-free first-home savings accounts. This makes good on a proposal made in budget 2022.
Restrictions reduced for non-Canadian homebuyers
Just months after introducing a new law that prohibits non-canadians from purchasing residential property , the government has amended the law and eased restrictions for home buyers in Canada on a work permit .
On March 27, the Canada Mortgage and Housing Corporation (CMCH) announced that the Prohibition on the Purchase of Residential Property by Non-Canadians Act had been amended. Under the amended Act, non-canadians on a work permit may now also purchase mixed-use residential and commercial land if they meet certain criteria. The amendments were effective immediately on the day of the announcement.
CMHC says work permit holders are now eligible if they have 183 days or more of validity remaining on their work permit or work authorization at the time of purchase. Also, they have not purchased more than one residential property in Canada.
The Act defined residential property as detached homes or similar buildings, semi-detached houses, rowhouse units, residential condominium units, and other similar premises.
Additionally, there has been an amendment to the provision that applied to vacant land. Vacant land zoned for residential and mixed-use can now be purchased by non-Canadians and used for any purpose by the purchaser, including residential development.
Proof of tax filings no longer necessary
The current provisions on tax filings and previous work experience in Canada are being repealed.
In the original Act, it was still technically possible for temporary residents to buy a home in Canada, but several conditions needed to be met for both work and study permit holders. Mainly, anyone in Canada on a work permit needed to:
Have worked in Canada for a minimum period of three years within the four years preceding the year in which the purchase was made, if the work is full-time work as defined in subsection 73(1) of the Immigration and Refugee Protection Regulations, (IRPA). Have filed all required income tax returns under the Income Tax Act for a minimum of three of the four taxation years preceding the year in which the purchase was made, and Not have purchased more than one residential property.
First home savings account
budget 2023 announced the official launch of the new Tax-Free First Home Savings Account (FHSA). It was initially proposed in the federal government's 2022 budget , and as of April 1, 2023, financial institutions are able to start offering this plan to Canadians.
The plan gives prospective first-time home buyers the ability to save up to $40,000 on a tax-free basis. The annual maximum contribution to the account is $8,000 per year. Contributions to the plan will be tax-deductible and withdrawals to purchase a first home will be non-taxable, similar to a Tax-Free Savings Account.
The First Home Savings Account is part of the Canadian government's plan to make housing more affordable as it helps Canadians save for a down payment to buy their first home. The government is estimating that the FHSA will provide $725 million in support over the next five years.
To be eligible to open an FHSA, participants must be:
A Canadian resident 18 years or older A first-time home buyer
The account may stay open for 15 years, or until the end of the year when a participant turns 71, or at the end of the year following the year in which a qualifying withdrawal is made from an FHSA for the first home purchase, whichever comes first.
Price of housing in Canada
Data from the Canadian Real Estate Association (CREA) shows the actual (not seasonally adjusted) national average home price was $662,437 in February 2023, down 18.9 percent from the all-time record in February 2022.
Further statistics released in March 2023 show that national home sales were up 2.3 percent month-over-month since February, even though the number of newly listed properties dropped almost 8% in the same period.
home prices remain mixed across canada. According to CREA,“with significantly higher borrowing costs, it's not surprising prices have mostly cooled from their peaks in more expensive markets within Ontario and British Columbia. Prices have been holding up much better in Alberta, Saskatchewan and Newfoundland and Labrador, with Quebec and the Maritime provinces landing somewhere in between.”
The national average home price is forecasted to decline 5.9 percent on an annual basis in 2023.
This article originally appeared on cic news on April 4, 2023.
