Liberals pledge to expand first-time home buyer incentive, new tax on foreign owners
OTTAWA – If the Liberals are re-elected they will expand the First-Time Home Buyer Incentive in targeted markets and implement a new one per cent national tax on foreign ownership of residential properties.
With the backdrop of housing under construction in Victoria, B.C., Liberal Leader Justin Trudeau announced the measures, the first major policy commitment since he kicked off the federal election campaign on Wednesday.
Specifically the Liberals are promising to:
- Expand the First-Time Home Buyer Incentive to allow homes valued at up to $789,000 to qualify exclusively in Toronto, Vancouver and Victoria; and
- Introduce a national one per cent annual vacancy and speculation tax on residential properties owned by non-resident, non-Canadians.
The First-Time Home Buyer Incentive came into effect on Sept. 2 and was announced in the Liberals' 2019 federal budget. The intention of the targeted support system is to make it easier for young people to buy their first home. As it stands it allows buyers who have the minimum down payment for a mortgage to finance 10 per cent on a new home or five per cent on an existing home through a shared equity mortgage with the Canadian Mortgage and Housing Corporation (CMHC).
Doing so has the effect of lowering buyers' monthly mortgage payments but at the moment only households with combined incomes lower than $120,000 annually qualify. One critique has been that given the restrictions on the size of a mortgage that buyers with that level of income cam qualify for, the maximum property value under this program is approximately $505,000. In major housing markets like Vancouver or Toronto, options for houses in that range are limited.
Trudeau said that the incentive expansion would come into effect the month after the federal election, and would change to include other cities as housing markets costs change. The Liberals say that the cost of expanding the incentive would be paid for by the CMHC's existing profit, and that further details on costing would be announced in the coming weeks of the campaign.
"One thing I hear a lot from young people here in Victoria is that they can't even imagine buying a home right now. Owning a house should be a realistic life goal," Trudeau said.
Thursday's foreign ownership tax announcement was also alluded to in the 2019 budget, where the Liberals vowed without detail to look at ways to monitor and target tax evaders and those who use real estate to launder money, in an effort to bring down housing prices.
The new tax will be on top of any local taxes these owners may already face and is meant to address the impact that foreign speculation on the Canadian market has had on driving up housing prices. Trudeau vowed that Canadians living abroad, and non-Canadians living in Canada will not be affected.
"We're doing this because we want our markets to stay stable and affordable," Trudeau said.
In his remarks Trudeau took time to note that the Conservatives voted against the First-Time Home Buyers Incentive, which was passed as part of the omnibus budget implementation bill.
Meanwhile in Toronto Conservative Leader Andrew Scheer restated a previous policy commitment at a childcare centre photo-op. He is pledging to remove the federal income tax from EI maternity and parental benefits by offering a tax credit of 15 per cent for any income earned under these programs.
Also in the GTA, NDP Leader Jagmeet Singh made a locally-focused platform commitment Thursday morning: to build a new hospital in Brampton, Ont. He made the announcement for the city—one he used to represent as an NDP MPP—with a backdrop of a lineup of people meant to symbolize the wait Canadians face for access to health services.