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Canada’s Federal Budget 2024: What You Need to Know in Regards to Real Estate

The government of Canada has released the Federal Budget 2024, which has a focus on Fairness for Every Generation, as a budget that “takes bold action to help build more homes…and will grow the economy in a way that’s shared by all Canadians.”

Following a series of housing announcements in recent weeks, the Canada Housing Plan released in Q2 2024, alongside the Canadian Federal Budget 2024, which details an ambitious set of housing initiatives aimed at tackling the housing crisis through increasing housing supply, helping homebuyers and renters, and supporting innovative solutions for real estate builders and developers.

TRREB’s Position

With the Federal Budget’s release, the Toronto Real Estate Board (TREB) applauds the slate of new real estate initiatives focused on increasing the Canadian housing supply; however, we urge caution on the impact of new tax measures that could also affect housing supply and affordability.

Among the new and previously announced measures, the 2024 Canadian Federal Budget aims to:

Increase the capital gains tax inclusion rate

The government is increasing the inclusion rate on capital gains realized annually above $250,000 by individuals and on all capital gains realized by corporations and trusts from one-half to two-thirds. Individuals will continue to pay tax on 50 per cent of any capital gains up to $250,000 per year. The new rules will apply to capital gains realized on or after June 25, 2024.

Selling your principal residence will continue to be exempt from capital gains taxation. TRREB will ensure we hold the government to this commitment.

Increase in Home Buyers’ Plan Limit:

The Home Buyers’ Plan (HBP) limit will increase from $35,000 to $60,000 for an individual or $120,000 for a couple, allowing first-time homebuyers to withdraw more from their Registered Retirement Savings Plans (RRSPs) for down payments, benefiting from the tax advantages of RRSP contributions.

Canadians withdrawing from their HBP between January 1, 2022, and December 31, 2025, will benefit from an extended repayment grace period, now up to five years, allowing them to better manage mortgage payments.

Extended Mortgage Amortization Periods:

The budget will introduce a provision for 30-year mortgage amortizations for first-time homebuyers purchasing newly built homes, starting August 1, 2024. This extension aims to make monthly mortgage payments more manageable.

Permanent Amortization Relief:

Enhancements to the Canadian Mortgage Charter will include permanent amortization relief for existing homeowners meeting specific criteria, thus allowing them to reduce their monthly mortgage payments as needed.

Housing Accelerator Fund Enhancement:

An additional $400 million will be added to the Housing Accelerator Fund, raising its total to $4.4 billion, aiming to fast-track the construction of an additional 12,000 new homes over the next three years.

Canada Housing Infrastructure Fund:

A new $6 billion fund will support the construction and upgrading of essential housing infrastructure to facilitate more homebuilding activities. The government is looking to partner with provinces to deliver this funding, in addition to working directly with municipalities.

Support for Renters:

New measures for renters include launching a new $15 million Tenant Protection Fund, creating a new Canadian Renters’ Bill of Rights, and making sure renters get credit for on-time rent payments.

Making Your Home Cheaper to Heat and Easier on the Environment:

To help Canadians lower monthly home heating costs, the government is reinvesting $903.5 million into a new Canada Greener Homes Affordability Program to support energy efficient retrofits for homeowners and renters with low- to median-incomes.

Combatting Mortgage Fraud:

Government will be consulting with the mortgage industry on making a tool available through the Canada Revenue Agency to verify borrower income for mortgages. Income verification through the CRA is something TRREB has strongly advocated for in the past.

Investing in New Approaches to Homebuilding:

Government is earmarking $50 million through Canada’s regional development agencies to support innovative housing projects, including those in modular housing, automation, and robotics.

Providing Low-Cost Loans to Prefabricated Housing Projects:

Earmarking at least $500 million in low-cost financing is to be made available through the program for new apartments that use prefabricated or innovative homebuilding techniques.

Offering Low-Cost Financing for Homeowners to Add Additional Suites:

Proposing a new Canada Secondary Suite Loan Program, delivered by the Canada Mortgage and Housing Corporation, will enable homeowners to access up to $40,000 in low-interest loans to add a secondary suite to their homes.

Accelerated Capital Cost Allowance Increase:

The federal government is increasing the post-tax Accelerated Capital Cost Allowance from 4% to 10% for purpose-built rentals. This will act as a major incentive for the construction of a new supply of purpose-build rentals.

In addition to these measures:

The government intends to restrict the purchase and acquisition of existing single-family homes by large corporate investors. The government will consult in the coming months and provide further details in the 2024 Fall Economic Statement.
The government is also considering introducing a new tax on residentially zoned vacant land and will launch consultations later this year.
The government intends to establish a subsidiary of the Canada Mortgage and Housing Corporation (CMHC) to deliver flood reinsurance.

The 2024 Canadian Federal Budget places a strong focus on enabling more housing supply; however, the Toronto Regional Real Estate Board (TRREB) will continue to monitor the potential impact of new tax measures on housing supply and affordability.