Federal Budget 2019
2019 Federal Budget Details
- First-Time Home Buyer Incentive. The CMHC First-Time Home Buyer Incentive is a shared equity mortgage that would give eligible first-time home buyers the ability to lower their borrowing costs by sharing the cost of buying a home with CMHC. The Incentive would provide funding of 5 or 10 per cent of the home purchase price. No ongoing monthly payments are required. The buyer would repay the Incentive, for example at re-sale. For example, if a borrower purchases a $400,000 home with a 5 per cent down payment and a 5 per cent CMHC shared equity mortgage ($20,000), the size of the borrower's insured mortgage would be reduced from $380,000 to $360,000, helping to lower the borrower's monthly mortgage bill. Terms and conditions will be released in the coming months and the program is expected to be operational by September 2019.
- Eligible first-time home buyers who have the minimum down payment for an insured mortgage would apply to finance a portion of their home purchase through a shared equity mortgage with CMHC.
- The Incentive would reduce the monthly payments required to buy a home.
- CMHC would offer qualified first-time home buyers a 10 per cent shared equity mortgage for a newly constructed home or a 5 per cent shared equity mortgage for an existing home. This larger shared equity mortgage for newly constructed homes is intended to help encourage the home construction needed to address some of the housing supply shortages in Canada.
- The Incentive would be available to first-time home buyers with household incomes under $120,000 per year. At the same time, participants' insured mortgage and the Incentive amount cannot be greater than four times the participants' annual household incomes.
- Increasing the Home Buyers' Plan (HBP) Withdrawal Limit from $25,000 to $35,000. The increase to $35,000 will allow home buyers greater access to their own savings to purchase a home. To date, the HBP has helped over 2.9 million Canadians achieve homeownership.
- Expanding Eligibility for the HBP During Significant Life Changes. Expanding the use of the HBP is a fiscally-conscious way to help Canadians maintain homeownership after experiencing a breakdown in their marriage or common-law partnership.
- Impact of Mortgage Rate Stress Tests. The government will continue to monitor the effects of its mortgage finance polices and adjust them if economic conditions warrant.
- Increasing Housing Supply Through Partnerships and Targeted Investments. The government continues to support the Rental Construction Financing Initiative launched in 2017. An additional $10 billion will be invested over the next nine years and the program will be extended until 2027-28. This investment will support the construction of 42,500 rental units across the country.
- Housing Supply Challenge. The government is launching a challenge to municipalities and other stakeholders to identify innovative ways to break down barriers that limit the construction of housing supply. More information on the challenge will be released in summer 2019.
- Reviewing Housing Supply and Affordability. On March 15, 2019, the Minister of Finance Canada along with British Columbia's Finance Minister and the Minister of Municipal Affairs and Housing launched an expert panel to discuss and provide recommendations on the future of housing supply and affordability. Budget 2019 will invest funds to support this initiative.
- National Housing Strategy. Launched in Budget 2017, the National Housing Strategy is a $40 billion investment in affordable housing. The government is proposing to introduce legislation that would require the federal government to maintain the National Housing Strategy and require regular reporting on the progress to Parliament.
- Increasing Fairness by Strengthening Rules and Compliance. The Canada Revenue Agency (CRA) will be creating four new audit teams dedicated to residential and commercial real estate in high-risk regions. This will ensure that real estate tax provisions will be respected and will focus on:
- Sale of principal residence is reported on tax returns;
- Capital gain from a real estate sale is accurately reported as taxable income (principal residence tax exemption still applies);
- Money made on real estate flipping is reported as income;
- Commissions earned are reported as taxable income;
- GST/HST on new residential properties is properly remitted to the CRA.
- Deterring Financial Crime in Real Estate. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) will increase their examinations in the real estate sector to improve detection of money laundering activities in real estate transactions.
- Improving Energy Efficiency. To increase energy efficiency for residential and commercial buildings, the government will assign $1.01 billion to the Federal of Canadian Municipalities through the Municipal Green Fund.