Life in Canada
The Canadian Government Has Simplified the Process For Newcomers to Buy a Home
The Canadian government has made it simpler for citizens of Canada and newcomers to buy a home. The government said last week that it was lowering some of an act’s restrictions that made it challenging for non-Canadians to own residential real estate. Financial institutions have now provided tax-free first-home savings accounts from April 1.
Restrictions are Reduced For Non-Canadian Homebuyers
The government has changed the law and reduced limitations for home purchasers in Canada with a work permit just months after implementing a new law that forbids non-Canadians from acquiring a residential property.
The Restriction on the Acquisition of Residential Property by Non-Canadians Act was changed, according to a March 27 announcement from the Canada Mortgage and Housing Corporation (CMCH). If they meet certain requirements, non-Canadians with work permits may now own land with a mix of residential and commercial uses. The modifications took effect the same day they were announced.
Work permit holders are now qualified, according to CMHC, if at the time of purchase, their work permit or work authorization had at least 183 days of validity left. Additionally, they have only bought one home property in Canada.
Proof of Tax Filing and Employment History is No Longer Required
The current rules regarding tax filing and previous employment history in Canada are being overturned. Although there were a few requirements for both holders of work and study permits, it was still technically allowed for temporary residents to purchase a home in Canada under the original Act.
Requirements are as follows:
- If the work is full-time work as defined in paragraph 73(1) of the Immigration and Refugee Protection Regulations;
- have worked in Canada for a minimum of three years within the four years before the year in which the purchase was made (IRPA);
- Have submitted all applicable income tax returns under the Income Tax Act for at least three of the four taxation years prior to the year in which the transaction was made;
- Have not purchased more than one residential property.
Introduction of Tax-Free First Home Savings Account
The introduction of the new Tax-Free First Home Savings Account (FHSA) was announced in Budget 2023. Financial institutions have begun promoting this proposal to Canadians as of April 1st, 2023 since it was first suggested in the federal government’s 2022 budget.
The program enables potential first-time home purchasers to tax-free save up to $40,000. The account’s yearly maximum contribution is $8,000 per year. Similar to a tax-free savings account, contributions to the plan will be tax deductible, and withdrawals used to fund the purchase of a first home will not be subject to taxes.
