There’s never a dull moment in the world of real estate, and so far 2023 is proving to be no exception. Finding it hard to keep up with all the changes? Here’s a rundown.
Already in play:
Two-year ban on foreign homebuyers
Foreign buyers are now prohibited from buying a home in Canada under the federal government’s Prohibition on the Purchase of Residential Property by Non-Canadians Act. The act was announced last June and came into effect on January 1. However, exemptions to the ban include: international students who meet certain requirements, foreign nationals with temporary resident status, diplomats, and workers who have worked and filed tax returns in Canada for a certain number of years.
Multi-generational home renovation tax credit
This one-time tax credit provides a 15% tax refund on home expenses up to $50,000 to accommodate a family member, to a maximum of $7,500. The tax credit took effect on January 1, 2023, so you could be eligible for this tax benefit on your 2023 tax return.
In another attempt to curb the housing market, the government has imposed an anti-flipping tax that came into effect this month. In Canada, when you sell your home, the profits are not subject to capital gains under the principal residence exemption (PRE). Some ‘house flippers’ have declared projects under this exemption, but no longer—under this new law, if you own a property for less than a year and sell it, profits from the sale will be taxed as business income.
Vacant home tax
Beginning this year, all Toronto homeowners must declare the occupancy status of their property annually. If your property is vacant for more than six months in a given year, you will have to pay the Vacant Home Tax (unless you qualify for an exemption, which could include property renovations, or if the homeowner has recently passed away or is in care).
If you’re a residential homeowner, you should have received a notice in the mail with instructions for declaring occupancy and you are required to do so by February 2, 2023.
Property tax hike
Toronto homeowners sure aren’t pleased about the recent announcement of a property tax increase of 5.5%—the highest increase since the city’s amalgamation. The average homeowner will owe an extra $233 per year. In addition, Tory said the 2023 budget will also include a proposed 3% tax increase for water, wastewater and solid waste.
For commercial properties, the proposed rate increase is 2.75% and 5.5% tax hike for industrial properties.
An influx of new condos
According to new data, a record number of new condos will be completed in Toronto and the GTA this year. With so many new properties on the market, it remains to be seen whether this increase in supply will help bring down soaring prices.
OFSI considering mortgage lending restrictions
As part of a newly launched stakeholder consultation on Guideline B-20, OSFI has proposed a number of debt serviceability measures, including loan-to-income and debt-to-income restrictions.
If implemented, OSFI’s proposed measures would limit what some borrowers qualify for, potentially dampening demand even further and keeping housing prices down.
More interest rate hikes?
Canadians could see the prime rate increase to 6.95% (and possibly higher) in early 2023. The Bank of Canada will continue increasing its policy rate by 25 to 50 points at each meeting, the next one being January 25th. However, this projection also predicts that the interest rate hikes may begin cooling down by March or April this year.