Tax-Free First Home Savings Account

Budget 2022 proposes to create the Tax-Free First Home Savings Account (FHSA) for prospective first-time home buyers. Eligible individuals may contribute up to $8,000 annually, not to exceed the $40,000 lifetime limit on contributions. The full annual contribution limit will be available effective 2023.

Similar to a Registered Retirement Savings Plan, contributions to an FHSA will be deductible and any income earned will not be subject to tax. Qualifying withdrawals from an FHSA, including investment income earned, made to purchase a first home will be non-taxable.

The Home Buyers’ Plan (HBP) will continue to be available as under existing rules, however, individuals will only be permitted to make a withdrawal under one of the programs (FHSA or HBP) in respect of the same qualifying home purchase.

Home Buyers’ Tax Credit

Under the existing rules, first-time home buyers can obtain up to $750 in tax relief by claiming the First-Time Home Buyers’ Tax Credit (HBTC). The Budget proposes to double the HBTC amount to $10,000 (previously $5,000). The enhanced credit will provide up to $1,500 in tax relief to eligible home buyers. Spouses or common-law partners may continue to split the credit as long as the combined tax relief does not exceed $1,500.

This measure will apply to homes purchased on or after January 1, 2022.

An Extended and More Flexible First-Time Home Buyer Incentive

Budget 2022 announces an extension of the First-Time Home Buyer Incentive to March 31, 2025. The Government is also exploring options to make the program more flexible and responsive to the needs of first-time home buyers, including single-led households.

Additional Housing Support

The Budget proposes to provide a one-time $500 payment in 2022-23 to those facing housing affordability challenges. The specifics and delivery method will be announced at a later date.

Ban on Foreign Investment in Canadian Housing

Budget 2022 proposes restrictions that would prohibit foreign commercial enterprises and people who are not Canadian citizens or permanent residents from acquiring non-recreational, residential property in Canada for a period of two years. Exemptions would apply for refugees, international students on the path to permanent residency and individuals on work permits who are residing in Canada.

Multigenerational Home Renovation Tax Credit

Budget 2022 proposes to introduce a new Multigenerational Home Renovation Tax Credit, which will provide up to $7,500 in support for constructing a secondary dwelling unit for a senior or a person with a disability. The credit will be available for the taxation year in which the renovation is completed.

This measure will apply for 2023 and subsequent taxation years, in respect of work performed or goods acquired on or after January 1, 2023.

Home Accessibility Tax Credit

Budget 2022 proposes to double the annual expense limit of the Home Accessibility Tax Credit to $20,000 for the 2022 and subsequent taxation years. Eligible individuals can receive a credit of up to $3,000, an increase from the previous tax credit of up to $1,500, for significant accessibility renovations or alterations for an eligible dwelling.