Several changes to taxation and tax benefits for the year 2021 have been introduced by the federal government.
Among the new measures now in effect are First Home Savings Account (FHSA), an increased tax on home-flipping, and a tax on unused or underused housing are
Certain homebuyers under the FHSA with a maximum annual contribution of $8,000 over five years, can save up to $40,000 toward a home purchase. While contributions to the FHSA are tax-deductible, withdrawals to purchase a home are tax-free.
According to reports, besides first-time homebuyers, the FHSA is also applicable to those looking to buy a home who haven’t owned one for four years or more are also eligible.
Multigenerational Home Renovation Tax Credit is yet another new tax benefit related to housing.
The refundable tax credit up to $7,500 would also be provided “in support for constructing a secondary suite for a senior or an adult with a disability to live with family members,” Finance Canada said in an email.
Eligible families can claim 15 percent of a maximum of $50,000 in home renovation and construction costs to build a secondary housing suite.
According to a new rule in budget 2022 by the government has effectively increased taxes on home-flipping meaning that the government will assume anyone who sells a home after possessing it for less than 12 months will be considered to be flipping the property and profits from the sale would be considered business income, not a capital gain.
There are a number of exceptions, such as selling a home because of a death or divorce.
The government is also introducing an Underused Housing Tax (UHT) with an annual one percent tax on the value of vacant and underused residential property in Canada owned directly or indirectly by a non-resident, non-Canadians
As of December 31, 2022, any non-resident or non-Canadian who owns an underused or vacant residential property in Canada will have to file a UHT return for the property by April 30, 2023, with exceptions for seasonal properties and properties made inaccessible by a hazard.
The Canada Revenue Agency reportedly said that personal income tax brackets and many tax benefits to inflation with an increase of 6.3 percent this year are indexed by the federal government, says
The Basic Personal Amount, the amount of income exempt from tax this year has also hiked to $15,000, up from 14,398 in 2022.
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