home buying

Federal Budget 2022—Home-buying, climate change and personal tax highlights

home buying in budget 2022

The federal government approached Budget 2022 under immense pressure to address skyrocketing inflation, amid widespread uncertainty as we enter a sixth wave of the coronavirus pandemic and facing global supply chain woes and a geopolitical crisis stemming from the war in Ukraine. Factor in the Liberals’ minority government status—one stabilized by a recent confidence-and-supply agreement with Jagmeet Singh’s New Democratic Party—and it’s no surprise that the Grits were prepared to spend lavishly and work to avoid ruffling many feathers.

They fully embraced the opportunity thanks to a tax revenue windfall from increased commodity prices. As we point out in our roundup of significant business proposals contained in Budget 2022, the Grits’ high-spending agenda could easily drive inflation to new heights. While the document contained few major surprises—there was no increase to capital gains inclusion rates, no introduction of an inheritance tax or any changes to the Principal Residence Exemption, as some budget-watchers had speculated—this is a highly substantive set of measures that will have a major impact on Canada’s fiscal standing. With a deficit estimated at $52.8 billion for 2022-23 and projected to drop to $8.4 billion in 2026-27, Ottawa still has no plans to balance the books. This will likely create significant fiscal challenges in future years.

In the meantime, the government is clearly prepared to spend to address their strategic priorities with Budget 2022: tackling inflation, helping Canadians climb onto (or climb up) the real estate ladder, enhancing the health care system and taking steps to fight climate change. That includes $10 billion to promote housing affordability and $5.3 billion for a new dental care program for low-income families.

Here are some of the key Budget 2022 highlights that will Canadians’ personal finances and the economy as a whole:

Housing affordability

  • $4 billion over five years for a new Housing Accelerator Fund, starting in 2022-23, designed to increasing Canada’s housing supply
  • The introduction of the Tax-free First Home Savings Account that would allow first-time buyers to save as much as $40,000 tax-free for a home down payment
  • A doubling of the First-Time Home Buyers’ Tax Credit amount to $10,000, or as much as $1,500 in support to home buyers. The measure would apply to homes purchases on or after January 1st, 2022
  • An extension of the First-Time Home Buyer Incentive to March 31st, 2025
  • $200 million in funding for the existing Affordable Housing Innovation Fund to develop rent-to-own projects across Canada
  • A two-year ban on purchases by foreign buyers of non-recreational, residential property
  • New rules that would fully tax (as business income) any profit on a primary residence sold within 12 months of its acquisition, with certain exceptions (e.g., divorce, death, moving for a work, birth of a child, etc.). The measure is designed to discourage house flipping that is thought to have contributed to the increase in prices in many Canadian markets
  • Make all assignment sales of newly constructed or renovated residential homes subject to GST/HST, effective May 7, 2022
  • $1.5 billion over two years to extend the Rapid Housing Initiative, with the goal of building at least 6,000 new affordable housing units
  • $2.9 billion in funding for the National Housing Co-Investment Fund to build up to 4,300 new housing units for vulnerable Canadians, and for the repair of up to 17,800 units
  • A one-time payment of $500 to Canadians facing housing affordability challenges, for a total program cost of $475 million
  • A reallocation of $500 million in funding for the National Housing Co-Investment Fund to establish a new Co-operative Housing Development Program, with $1 billion in loans to be redirected from the Rental Construction Financing Initiative to develop co-op housing projects
  • $150 million over two years to build affordable housing and housing infrastructure in the North
  • A new Multigenerational Home Renovation Tax Credit that would allow Canadians to claim 15 per cent of up to $50,000 in eligible renovation costs incurred when building a secondary suite for a family member, for as much as $7,500 in savings
  • $150 million over five years to develop a Canada Green Buildings Strategy to drive building code reform, speed the adoption of performance-based national building codes and promote the use of lower-carbon construction materials
  • $200 million over five years to develop a Deep Retrofit Accelerator Initiative for retrofits and audits of large projects across the country
  • An additional $458.5 million in funding for the Canada Greener Homes Loan program
  • $562.2 million over two years, beginning in 2024-25, for Reaching Home, a fund that supports organizations addressing homelessness

Personal tax, childcare, defence and climate change

  • The government intends to examine a new minimum tax on high income earners, details of which are promised in the fall economic update later this year
  • $625 million over four years to develop an Early Learning and Child Care Infrastructure Fund
  • $2.1 billion in funding over five years to support the settlement of new permanent residents in Canada
  • $6.1 billion over five years for defence spending
  • $875.2 million over five years to enhance cybersecurity defences
  • $500 million in 2022-23 for military aid to Ukraine
  • $1.7 billion over five years to extend the Zero-Emission Vehicles program until March, 2025
  • $500 million for urban electric vehicle charging and refuelling infrastructure and $400 million over five years to install charging infrastructure in suburban communities
  • $2.2 billion over seven years, starting in 2022-23, to extend the Low Carbon Economy Fund
  • Accelerated tax deductions for business investment in clean energy equipment
  • $250 million over four years to support development of clean-energy projects and $600 million over seven years, starting in 2022-23 for the Smart Renewables and Electrification Pathways Program to support renewable electricity and grid modernization projects
  • $5.3 billion over five years for a new dental care program for low-income Canadians. The program will cover children under 12 in 2022, before expanding to those younger than 18, seniors and disabled individuals in 2023. The program will be limited to families with an income of less than $90,000 annually
  • $140 million over two years for the Wellness Together Canada portal to help Canadians address their mental health and well-being
  • A new allowance of various medical expenses related to surrogacy and fees paid to fertility clinics and donor banks in Canada
  • An elimination of the excise duty on non-alcoholic beer

Armando Iannuzzi, Co-Managing Partner

For more information on how the federal budget impacts you or your business, contact a member of our team.

Armando Iannuzzi

905-946-1300, x. 239