Marc Miller, Canada’s Minister of Immigration, Refugees and Citizenship, has unveiled the Tax-Free First Home Buyer Savings Account initiative on August 11, aimed at assisting Canadians in achieving affordable homeownership.
The policy responds to the rising housing costs in Canada, driven by a labor shortage in the construction sector and a surge in immigration to the country.
Miller stated that the initiative combines efforts to facilitate homeownership, such as the first-time home savings accounts, with strategic immigration policies to make housing more affordable and attract skilled workers for the construction industry.
The Tax-Free First Home Buyer Savings Account is a registered savings account designed for first-time home buyers, allowing them to save up to $8,000 annually for their first down payment, up to a lifetime limit of $40,000 over 15 years. Contributions to this account are tax-deductible, similar to a Registered Retirement Savings Plan (RRSP). Withdrawals from the account, including investment income, used for purchasing the first home are tax-free.
Financial institutions have been offering this account since April 1, and more institutions are planning to offer this service.
This savings account can be used alongside the Home Buyers Program, which permits Canadians to withdraw up to $35,000 from an RRSP to buy or construct an eligible home for themselves or a relative with disabilities.
The Tax-Free First Home Buyer Savings Account complements other federal government efforts to accelerate housing construction and affordability. These efforts include:
- Two-year restrictions on non-residents purchasing residential properties to curb speculation
- An annual tax on underutilized properties owned by non-residents
- Measures to ensure proper taxation of profits from property transfers held for less than 12 months
- Doubling the first-time homebuyer tax credit to provide financial support for closing costs
- Launching a multigenerational home improvement tax credit to support building homes for senior citizens or adults with disabilities
- Imposing GST/HST on sales of newly built or substantially refurbished dwellings
- Initiating a Housing Acceleration Fund to incentivize housing construction
- Funding for the Affordable Housing Innovation Fund and the Rapid Housing Program to address housing needs
Canada is addressing housing affordability concerns while also focusing on addressing labor shortages in the homebuilding sector through immigration policies and targeted programs.
