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R E A L E S TAT E W E E K LY
Budget 2017 Promises $11.2bn for Social Housing,
No Cooling Measures for Real Estate
T
he 2017 federal budget announced Wednesday, March 22 put to rest the possibility of national foreign homebuyer taxation or changes to capital gains taxes, while revealing plans for multibillion-dollar investment in affordable housing. Minister of Finance Bill Morneau revealed that the federal government is investing $11.2 billion to support a National Housing Strategy. Moreau considers it, “the largest single commitment in Budget 2017.” The $11.2 billion will be spread out over the next 11 years, and includes: • $5 billion for a national housing fund to support creation of new affordable housing and rental units, administered by the Canada Mortgage and Housing Corporation (CMHC); • $3.2 billion for provincial efforts to
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support affordable housing; • $2.1 billion to address homelessness; and • $241 million for CMHC to improve data collection. In an effort to create a sustainable social housing sector, the government says it will also make more federal land available for housing projects. “We’re repairing nearly 50,000 social housing units, to make sure families have a safe and secure place to live,” Morneau said. There had been widespread speculation that a change in capital gains taxation would be imposed to curb real estate speculation, while keeping the exemption from capital gains tax for those selling their primary residence. However, there was no such announcement. Frank O’Brien, editor of REW.ca’s sister
Vancouver Needs a “Housing Strategy Reset:” City
newspaper Western Investor, told the Real Estate Therapist radio show on Roundhouse Radio March 25 that just because the federal government had not made any changes to the capital gains tax in this budget did not mean they wouldn’t do so separately or next year. “I think the government is setting us up for a big change in the capital cost allowance,” he said. “You have to remember they bring in a budget every year. There’s a lot of paranoia in the market now that the government requires everybody to report the sale of a property. Principal residences are exempt from CCA, but rental income properties are not. So now the more-rigid policing of property sales could expose a lot of people to increased tax, especially if they are selling their principal residence but it has rental units like a laneway house and a basement suite. The government is pulling all this information together and they’re not doing it to send out press releases, I think it’s going to be a major
Buying a Home? How to Optimize Your Offer
tax grab next year – so fair warning about that. This year, we’re being lulled into the pit.” It had even been mooted that there might be a national foreign buyer tax introduced, like the one that Metro Vancouver has had in place since August 2016, but there is no sign of such intervention by the federal government so far. However, feds are investing nearly $40 million over the next five years to create a new nationwide housing database that will track foreign ownership. “The [Housing Statistics Framework] will represent a significant jump forward in the quality and type of housing data available and will yield signifi cant ongoing benefits by enhancing the ability of housing participants, commentators and policy-makers to monitor and analyze the housing market,” according to the 2017 budget. There were no major changes to tax measures, though Morneau said the government is committed to providing a fair tax system to the benefit of the middle class, with details to follow. More than $5.9 billion will be dedicated infrastructure development over the next year, with a focus on transit projects.
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