This afternoon, Deputy Prime Minister and Minister of Finance Chrystia Freeland tabled Budget 2021 in the House of Commons, the Liberal government’s first budget in more than two years. As anticipated, Minister Freeland’s first budget included $100 billion of spending on stimulus measures to kickstart the country’s economic recovery and get Canadians back to work, with considerable emphasis on climate change and child-care.
“This budget is about finishing the fight against COVID-19. It’s about healing the wounds left by the COVID-19 recession,” said the Minister. “It’s about creating more jobs and prosperity for Canadians in the days—and decades—to come.”
The Canadian Real Estate Association (CREA) was pleased to see wage and rent support programs extended, as we’ve been in ongoing discussions with government on this matter since the emergence of COVID-19 to ensure real estate professionals are able to access these programs. We’ve also had meaningful conversations about the unique challenges facing REALTORS® and the potentially devastating outcomes of any interruptions to their day-to-day business.
REALTORS® can also be proud of their advocacy work over the course of a very challenging year. Budget 2021 included several big-ticket items for homeowners across Canada:
- Despite ongoing rumours, there was no change to the capital gains tax exemption on the sale of primary residences. CREA has consistently spoken publicly against any suggestion Canadians should be taxed on the equity in their homes and had received assurances ahead of today’s budget no such measure would be implemented.
- To build on the energy-efficient improvement grants and free EnerGuide energy assessments announced in the 2020 Fall Economic Statement, Budget 2021 proposes $4.4 billion for homeowners to make deep home retrofits through interest-free loans worth up to $40,000. Examples of deep retrofits include:
- Replacing oil furnaces or low-efficiency systems with a high efficiency furnace, air source heat pump, or geothermal heat pump.
- Better wall or basement insulation and/or wall or roof panels.
- Installing a high-efficiency water heater or on-site renewable energy like solar panels
- Replacing drafty windows and doors.
- Conditions for the GST New Housing Rebate, which entitles home buyers to recover 36% of the GST paid on the purchase of a new home priced up to $350,000, are being relaxed. It would now be available if the new home is acquired for use as the primary place of residence of any one of the purchasers or a relation of any one of the purchasers.
- As per CREA’s recommendations, the government will allocate $2.1 million over two years to support the implementation of a publicly accessible corporate beneficial ownership registry by 2025.
- To tackle the issue of housing supply, Budget 2021 proposes to advance and reallocate $1.3 billion through the National Housing Co-Investment Fund and the Rental Construction Financing Initiative, including for the conversion of vacant commercial property into housing.
- As part of REALTORS Care® Week 2020, more than 300 of our members signed a letter to Minister Ahmed Hussen, Minister for Families, Children and Social Development encouraging him to promptly fulfill government commitments to end homelessness, and government has responded by announcing $2.5 billion for affordable housing through the Canada Mortgage and Housing Corporation.
- The federal government has committed to engaging with the Government of Quebec to determine what additional federal contribution is required to help Quebec residents address structural problems as a result of the presence of the mineral pyrrhotite in their homes’ foundations. Details will be provided in the next Fall Economic Statement.
- The Universal Broadband Fund will receive an additional $1 billion to support a more rapid rollout of broadband projects in collaboration with provinces and territories and other partners, resulting in thousands more Canadians and small businesses with faster, more reliable internet connections.
- $63.8 million will also be allocated to Natural Resources Canada, Environment and Climate Change Canada, and Public Safety Canada to work with provinces and territories to complete flood maps for higher-risk areas. REALTORS® will benefit from a more accurate understanding of flood risk in their communities.
“With the tabling of Budget 2021, the government has made clear that homeownership remains a priority,” said CREA Chair Cliff Stevenson. “Measures implemented since Budget 2019, from the expansion of the Home Buyers’ Plan to new home energy efficiency grants, are the direct result of effective advocacy from the REALTOR® community.”
Budget 2021 also announces the government’s intention to implement a national, annual 1% tax on the value of non-resident, non-Canadian owned residential real estate that is considered to be vacant or underused, effective January 1, 2022. While CREA welcomes a discussion on measures seeking to increase housing supply, we’ve engaged with government to discuss perceived effectiveness, dual-taxation, and the effect of a national measure on smaller communities, such as in cottage/cabin country, whose economic stability is dependent on foreign ownership.
In response to CREA’s advocacy, government will release a consultation paper to provide stakeholders with an opportunity to comment on the parameters of the proposed tax, including on whether special rules should be established for small tourism and resort communities. We will participate in the consultation.
“CREA welcomes government’s commitment to housing affordability for Canadians through their support for homeownership,” said CREA CEO Michael Bourque. “We now look forward to continuing our work with key decision makers to address the most critical issue facing housing in Canada: creating more supply.”
Budget 2021 will be debated and then subject to a confidence vote. The Liberals will need to secure support from at least one opposition party to avoid triggering an election.