A Review Of The 2022 Budget Initiatives.
Housing is a basic human right for all Canadians.
Everyone deserves a safe and affordable place to call home, where they can relax and recharge after a long day.
But the reality is that making that happen is still a big challenge. High costs, complicated planning, and environmental management are just a few hurdles we must overcome.
Thankfully, the 2022 federal budget took important steps toward building more homes and making housing affordable across the country.
A few of the new initiatives in the budget for homebuyers include:
- Helping Canadians purchase their first-ever home.
- Protecting renters and buyers.
- Addressing Indigenous people’s housing needs.
- Combating unjust practices that lead to an increase in housing prices.
- Paying attention to the root cause of homelessness.
Prioritising The Urgency Of Building Affordable Housing
The government acknowledged the urgent need for more affordable housing in Canada, especially for individuals at risk of homelessness.
To achieve this objective, the government proposed to spend $1.5 billion over two years, starting in 2022,
One of the Federal Government’s plans is to allocate $1.5 billion in two years, starting in 2022 up to the following year, to expand the Rapid Housing Initiative.
The Rapid Housing Initiative provides financial assistance for purchasing properties in poor condition or abandoned properties to convert them into affordable housing.
This includes uninhabitable properties that have been removed from the housing market due to neglect or disrepair.
Such funding is generally expected to create at least 6,000 affordable housing units. Twenty-five percent of the fund focused on women’s housing projects.
Housing Acceleration Fund
The new federal government initiative also called for a new housing acceleration fund to eliminate obstacles and assist municipalities in constructing housing more efficiently, ambitiously, and creatively.
Building more housing usually takes more money.
But it also means shaking up the systems currently holding us back from building new housing units.
To achieve the initiative of this new housing acceleration fund, the federal government proposed an investment of $4 billion over a five period, starting in 2022-2023, to create 100,000 housing units.
This investment also included support for annual per-door incentives or upfront money for investments to speed up housing development and for planning for housing within municipalities.
Banning Foreign Investment In The Canadian Housing Market
The government also wants to combat the rise in foreign investments in the Canadian housing market, especially in big cities like Vancouver and Toronto, which has been one of the primary causes of the high house prices in these markets.
The foreign investment into these markets has made real estate unaffordable for locals in those cities and towns.
To address this, the government’s budget for 2022 talks about putting restrictions in place to prevent companies and people who aren’t from Canada from buying residential or non-vacation properties for at least two years.
This will help make sure that Canadians, instead of foreigners, end up owning the housing.
Tax Credit For Multigenerational Home Renovation
Many Canadians like to stick to the tradition of living with multiple generations in one house – like grandparents, parents, and kids all under one roof.
This is often seen as an important way for families to take care of and look out for each other.
To help families who live together, the government’s budget for 2022 created a new tax credit called the Multigenerational Home Renovation Tax Credit.
It gives families up to $7,500 to help them build a special place, a secondary suite or a room for an older adult or someone with a disability, starting in 2023.
Support For Rent-To-Own Projects
Rent-to-own programs can make it easier for people to become homeowners, even in a high-priced market.
A rent-to-own agreement is an arrangement in which you commit to renting a property for a specific time, with the option of buying it before the lease runs out.
Rent-to-own programs give renters more time and support to save up and get ready to buy a home. It also lets them live and settle in the home they’ll eventually own.
To help create more rent-to-own options in Canada, the government’s budget for 2022 plans to give $200 million in funding through the Affordable Housing Innovation Fund.
This includes $100 million to help non-profits, co-ops, developers, and companies specializing in rent-to-own to build new units.
Investing In Indigenous Communities’ Housing Programs
Everyone deserves a safe place to live.
The 2022 budget proposed an initiative to support the housing needs of the Indigenous communities.
This initiative will ensure that Indigenous people have access to affordable and safe housing to improve their health and overall well-being and give them a better future.
The government has already invested over $2.7 billion in housing for Indigenous communities since 2015.
Now, in the budget for 2022, they’re planning to give an additional $4.3 billion over seven years to make more and better housing for Indigenous people in Canada, which includes:
- $845 million for seven years to support the development of housing within Inuit communities
- $2.4 billion for five years to provide support towards First Nations housing on reserves
- $300 million for five years to launch and co-develop a Northern, Urban, and Rural strategy for Indigenous Housing
- $565 million for five years to provide housing support in Modern Treaty Holder First Nations and Self-Governing communities
- $190 million for Metis communities’ housing development and construction for seven years.
So on top of all that new money, the government is also setting aside $2 billion from a $20 billion fund for improving the services for First Nations kids and families, specifically for housing, once they reach an agreement.
All in all, the government will spend about $6.3 billion over seven years on Indigenous housing in Canada.
The government has a plan called Reaching Home: Canada’s Homelessness Strategy, and they’ve promised to spend over $3 billion to help with homelessness.
The government planned to double the money it would spend for four years because of the pandemic.
The 2022 budget proposes to give $562.2 million over two years, starting in 2024-25, to the Reaching Home project.
This money will provide more security for the organizations doing important work all over the country and ensure our communities have the support they need to fight homelessness.
The Co-operative Housing Development Initiative
Co-ops have provided Canadians with affordable and good-quality housing for generations.
They also allow Canadians to grow and feel secure through long-term leases and community-based living arrangements.
So, the budget for 2022 wants to relocate $500 million from the National Housing Co-Investment Fund to start a new program called the Co-operative Housing Development Program.
The goal is to make more co-op housing in Canada.
And the government will work with the Co-operative Housing Federation of Canada and other players in the co-op housing industry to create this program.
The government also plans to allocate an additional $1 billion in loans from the Rental Construction Financing Initiative to support the development of co-op housing projects.
An Extended First-Time Homebuyer’s Incentive Program
The federal government also introduced a new First-Time Home Buyer Incentive to make it easier for people to afford their first home.
This incentive helps reduce the borrowing cost for eligible first-time buyers by sharing the cost of buying a house with the federal government.
First-time buyers eligible for this program will see a reduction in their monthly mortgage payments.
It’s a shared-equity mortgage with the government, where it will chip in the following for the purchase of your first house in Canada:
- For a newly built home, either 5% or 10% of the purchase price.
- The government will support you with 5% of the purchase price for an existing house.
- For purchasing a newly built mobile or manufactured house, the government will support you with 5% of the purchase price.
The government will share in both the gains and losses of the property value by up to 8% per year.
Tax-Free First Home Savings Account:
With home prices on the rise, the cost of a down payment is also getting steeper.
This can be a significant obstacle for people, especially young folks, who are trying to buy a house.
The 2022 budget has a great new plan called the Tax-Free First Home Savings Account. It would let first-time home buyers save up to $40,000 without paying taxes.
Basically, it works like an RRSP where you can deduct your contributions, but when you withdraw the money to buy a house, it’s tax-free, just like a TFSA.
So you don’t pay taxes when you put the money in, and you don’t pay taxes when you take it out.
Property flipping is when someone buys a house to quickly sell for more than what they bought the house for.
This action can make housing prices go up unfairly.
And some people engaging in this activity might not report their profits correctly to avoid paying the right amount of taxes.
To ensure that people who flip properties are paying the right taxes, the government’s budget for 2022 wants to put new rules in place.
If someone sells a property they’ve had for less than a year, they’ll have to pay taxes on their profits like it’s business income.
This would apply to residential properties sold after January 1, 2023. But, there are exceptions for Canadians who have to sell their home because of certain life events like death, disability, having a child, getting a new job, or getting divorced.
Home Accessibility Tax Credit For The Elderly And People With Disabilities
Older folks and people with disabilities deserve to be able to stay in their own homes as they age.
Still, sometimes it can be expensive to make their houses safe and accessible for them.
That’s where the Home Accessibility Tax Credit comes in – it helps cover some of those costs.
The 2022 budget plan includes a sweet deal for people looking to make their homes more accessible.
They’re doubling the amount you can spend on renovations and still get a tax credit. Starting in 2022, you can spend up to $20,000 and get a credit of up to $3,000. That’s a big jump from the previous $1,500 credit.
Housing Repairs And Construction For Vulnerable Canadians
In the last five years, the National Housing Co-Investment Fund has helped build and fix up 108,000 homes for Canadians who need it the most.
The 2022 budget housing initiative plan allocated $2.9 billion to this effort.
This money will help create 4,300 new homes and fix up 17,800 existing homes for vulnerable Canadians through to 2025-26.