When Canada’s federal budget was announced in early April, it included several measures aimed at cooling the housing market. These moves are a response to increasing concerns about the affordability of housing across the country. If the measures are passed, they will have a significant impact on real estate transactions in British Columbia.
One of the changes garnering a great deal of attention is a measure to ensure house flipping profits are taxed as business income. Many individuals across Canada invest in residential real estate in order to make improvements and sell at a profit. This change, if passed, would ensure that residential real estate that is purchased and sold for the purpose of flipping does not qualify for capital gains inclusion or principal residence tax exemption.
Other proposed measures include:
- Doubling the homebuyer’s amount: This would give buyers up to $1,500 in added tax relief.
- Creating a multi generational home renovation tax credit: This would help families create a separate dwelling under one roof for elderly or disabled relatives.
- Restrictions on foreign buying of Canadian property: This would block non-residents and foreign commercial firms from purchasing property in Canada, and the proposed ban would last for two years.
- Increasing the home accessibility tax credit limit to $20,000
As with any major proposed changes, sentiment and opinion is mixed on these measures. Nevertheless, it is clear from the federal budget that housing affordability will be a focus in the coming years. If passed, these measures will certainly impact British Columbia homebuyers and sellers alike, especially those looking to invest in real estate through house flipping. As always, it is recommended to speak with a real estate lawyer as soon as possible when entering the real estate market, either as a buyer or seller.