- The Canadian government has taken measures to make it easier for newcomers to purchase homes in Canada by reducing restrictions on the purchase of residential properties for non-Canadians on work permits and repealing previous requirements for tax filings and work experience in Canada.
- Financial institutions in Canada will be able to offer a Tax-Free First Home Savings Account (FHSA) starting from April 1st, 2023, allowing first-time home buyers to save up to $40,000 on a tax-free basis.
- Housing prices in Canada have seen a cooling in more expensive markets in Ontario and British Columbia due to higher borrowing costs, while prices have held up well in Alberta, Saskatchewan, Newfoundland and Labrador, and Quebec, and the Maritime provinces land somewhere in between.
Buying a home is a significant milestone and often a long-term investment. In Canada, the government has taken measures to ease the process of homeownership, not only for Canadians but also for newcomers. This article explores the recent changes made to the Canadian homebuying process, making it more accessible for newcomers.
Restrictions Reduced for Non-Canadian Homebuyers
In a move that benefits newcomers on work permits, the Canadian government has eased restrictions on the purchase of residential properties. The Prohibition on the Purchase of Residential Property by Non-Canadians Act, which prohibited non-Canadians from purchasing residential property, was amended. Non-Canadians on a work permit are now eligible to purchase mixed-use residential and commercial land, provided they meet certain criteria.
The Canada Mortgage and Housing Corporation (CMHC) has specified that work permit holders are eligible if they have 183 days or more of validity remaining on their work permit or work authorization at the time of purchase. Additionally, they should not have purchased more than one residential property in Canada. This amendment expands the types of properties that non-Canadians can purchase, making it easier for them to invest in mixed-use land.
Proof of Tax Filings No Longer Necessary
Previous requirements for tax filings and work experience in Canada have been repealed. According to the original act, temporary residents could purchase a house in Canada if certain conditions were met. The Immigration, Refugees and Citizenship Canada (IRCC) Work permit holders need to have worked in Canada for a minimum of three years within the four years preceding the year of purchase. They also needed to have filed all required income tax returns for at least three of the four taxation years preceding the year of purchase and could not have purchased more than one residential property. These requirements have now been repealed, making it easier for temporary residents to purchase a house in Canada.
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First Home Savings Account
As of April 1st, 2023, financial institutions in Canada can offer a Tax-Free First Home Savings Account (FHSA). The FHSA was proposed in the federal government’s 2022 budget and aims to provide first-time house buyers the ability to save up to $40,000 on a tax-free basis. The maximum annual contribution to the account is $8,000 per year, with tax-deductible contributions and non-taxable withdrawals for first-home purchases.
This initiative is part of the Canadian government’s efforts to make housing more affordable and to help Canadians save for their first home. It is estimated that the FHSA will provide $725 million in support over the next five years. To open an FHSA, participants must be Canadian residents, 18 years or older, and first-time house buyers.
Price of Housing in Canada
According to data from the Canadian Real Estate Association (CREA), the actual (not seasonally adjusted) national average home price was $662,437 in February 2023, down 18.9% from the record in February 2022. The number of newly listed properties dropped almost 8% from February, but home sales rose by 2.3% month-over-month.
Housing prices across Canada vary, with more expensive markets in Ontario and British Columbia seeing a cooling in prices due to higher borrowing costs. In contrast, prices have held up well in Alberta, Saskatchewan, Newfoundland, and Labrador, while Quebec and the Maritime provinces land somewhere in between.
Conclusion
In conclusion, the Canadian government has taken significant steps toward making the home-buying process more accessible for newcomers. The amendments to the Prohibition on the Purchase of Residential Property by the Non-Canadians Act and the repeal of previous tax filing and work experience requirements have made it easier for temporary residents to invest in mixed-use land and purchase a home in Canada.
The Tax-Free First Home Savings Account is an additional initiative aimed at helping first-time house buyers save for their dream home. While housing prices across Canada vary, the recent cooling in prices in some of the more expensive markets may provide an opportunity for those looking to enter the housing market. Overall, the government’s efforts demonstrate a commitment to affordable housing and making homeownership a reality for all.
