A proposed measure intends to maximize the value of vacant or underused residential properties
A provision in the latest budget proposal by the Liberal government will impose a new tax aimed at foreign owners of Canadian residential real estate, should the budget get passed.
If approved, the annual 1% tax – which will cover vacant or underused “non-resident, non-Canadian owned residential real estate” – will take effect on January 01, 2022.
“The idea here is that homes are for Canadians to live in,” Finance Minister Chrystia Freeland said. “They are not assets for parking offshore money.”
Read more: Canada’s federal government considering foreign home buyers’ tax
Among the main requirements of the levy will be detailed declarations on the purpose of such properties, “with significant penalties” for foreign owners should they fail to make them.
Through the tax, the Liberal administration is anticipating a roughly $700 million increase in federal revenues over four years.
The federal government is expected to collect feedback on the proposed measure in the coming months, “including on whether special rules should be established for small tourism and resort communities,” the Financial Post reported.
Read more: Policy makers could do more to address unaffordability crises – broker
The budget represents one of the federal government’s strongest steps to date when it comes to addressing the perennial problem of housing in Canada.
Apart from $2.5 billion to be provided over seven years to the Canada Mortgage and Housing Corporation, another $1.5 billion will be allocated for the ambitious Rapid Housing Initiative that ultimately aims to build, repair, and support around 35,000 affordable housing units nationwide.
The proposal estimated that these additional tranches will help in the development of at least 4,500 low-cost housing units across Canada, on top of the 4,700 affordable units already paid for.
