The new federal budget was released last month, and apart from a minimal 1% in occupancy tax on foreign-owned properties, they didn’t throw in anything to correct/stabilize the real estate market. We talked to Cameron Miller, Sales Representative to get his take on what that means for buyers and sellers in Toronto.
How do you think the budget will affect someone who wants to buy in the next couple of years?
The average price for a home in the GTA is now well over a million, and prices are likely to increase further as the real estate market continues to operate in high gear, with growing demand and low inventory supply.
Not including anything meant to cool the market means housing prices will just keep going up. And that means buyers – and especially first-time homebuyers with more limited budgets – will have less and less buying power.
Read more: Your definitive guide to the Toronto housing market
How does the budget compare to what we expected?
There was speculation that the capital gain inclusion rate would increase from 50% to 75%. That didn’t happen. In Canada, 50% of capital gains from a non-primary residence (like an investment or vacation property) are taxable. So basically, you add half the capital gains from a sale to your income, which is likely to put you in a much higher tax bracket.
There was also some talk about a capital gains tax being imposed on the sale of primary residences, but that didn’t materialize either. Right now, when you sell your primary residence, whatever gains you made are NOT taxable. Changing that would impact people’s desire to sell – and drive down supply even more and drive up prices further, so it’s a good thing they didn’t add this.
Is there any help in the budget for buyers and homeowners?
Yes, thankfully, there are a few things buyers and homeowners can take advantage of in 2021.
There’s a $40K interest-free loan available to help homeowners with energy-efficient improvements. It covers replacing old furnaces, improving insulation, installing things like solar panels, replacing windows and doors and more. More details here
In addition, the HST New Housing Rebate has had an update: to qualify for the rebate before, both owners had to use the property as their primary residence. With the update, however, now only one of the owners has to use it that way.
What’s your biggest takeaway from the budget?
There’s one thing that’s very clear from the newly announced federal budget — the government plans on spending a lot of money rebuilding the economy. And the only way to do this is by printing more money. When there’s a surplus of money, currency gets devalued and prices go up, for everything from gas and groceries to, yes, real estate. So if you’re planning to buy or invest, there’s no time like the present.
Ready to jump into the market? Talk to a Property.ca agent for the knowledge and insights you need to make a smart move.