In recent months, a number of tax and regulatory changes have taken place which impact the Canadian real estate market. Some of these changes have the potential to be highly beneficial to Canadians, others present challenges, and some simply require pause for consideration. As trusted business advisors, the team at Zeifmans remains continually informed so that we can guide our clients towards decisions that will create lasting wealth. In today’s blog post, we’re going to take a look at some of the recent changes to real estate regulations, and explore the ways in which they could impact your investments in the future.
The Home Buyer Limit Change
Budget 2019 provided for changes to the maximum amount available for the home buyers plan (HBP) which allows for individuals that qualify to access funds from their RRSP for the purpose of acquiring a home and repay the withdrawn amount over a period of time. The HBP limit has increased from $25,000 to $35,000 per individual (a married couple can therefore each access $35,000 for a combined $70,000). Not only does this empower Canadians to more easily access funds for a down payment, but it’s easy to see how the limit change could also work favourably from a tax perspective: Individuals who have the RRSP contribution room available, qualify for the HBP and are looking at purchasing a home could contribute to the RRSP and subsequently withdraw the funds under the HBP (there is a time period the funds must be in the RRSP). The individuals would then benefit from the RRSP deduction while still being able to access the funds for acquiring their home.
CMHC Shared Equity Program
Budget 2019 also announced the CMHC Shared Equity Program. Under the shared equity program, the Canada Housing and Mortgage Corporation (CMHC) will contribute either 5% or 10% of the purchase price of the home. In order to qualify, family income must be below $120,000 and the amount of the mortgage plus any incentives cannot exceed four times family income. At the time of sale, the CMHC shared equity portion will be required to be repaid. While the program has some opportunities to be beneficial there are a number of drawbacks including the fact that the government has an interest in your home, which may limit your ability to access home equity line of credits or other nuances.
Beneficial Ownership Disclosure
On a federal level, Bill C-86 received royal assent on December 13, 2018 and came into force June 13, 2019. The bill requires federally incorporated corporations to list individuals with significant control (including beneficial owners of the corporation). In the real estate context, if a federally incorporated corporation is used as a nominee for holding title to real estate or a real estate venture, beneficial owners of the corporation must now be disclosed.
Ontario’s Housing Supply Action plan
On May 2, 2019, the Ontario government announced proposed changes to combat the housing crisis – affecting new home ownership and rental vacancies. The predominate theme of the plan is to reduce the “red tape’ involved in building homes and making housing more affordable. The plan has many facets, and as such we will be discussing it in more detail in an upcoming blog post. Stay tuned to learn more.
Your trusted Real Estate investment advisors
While longstanding real estate investors have benefitted significantly from increases in the value of Canadian real estate in recent years, first-time buyers have found it increasingly difficult to break into the market. At Zeifmans, our clients span both poles, and we’re accustomed to advising both seasoned veterans and brand new investors in navigating market changes. Curious about how the new legislative changes may impact your real estate investments? Reach out to one of our advisors to learn more about how you can benefit from these new opportunities.