Richards Report – March 15, 2017

Making it Harder for Homebuyers and Homeowners

Owning a home is a dream that many Canadians work very hard to make a reality. The satisfaction and sense of accomplishment that comes with picking up the keys to your first home is immeasurable. Unfortunately, the Liberal government has made some recent changes, including the requirement that all borrowers who apply for an insured mortgage must qualify at the Bank of Canada’s posted rate, which is much higher than the interest rate they will actually be paying on their mortgage. These changes will make it much more difficult for Canadians to purchase their first home.

There is no arguing that the affordable housing crisis in some large cities and the related mortgage insurance risk to Canadian taxpayers is concerning; however it is disappointing that the Liberals have unilaterally made major changes that affect the housing market without consulting industry or consumers.

These new rule changes are a one-size fits all solution that ignores the differences in local markets across the country. Furthermore, the changes will do nothing to help affordability or stimulate economic growth. As a former Real Estate professional myself, I understand that by making it more difficult to obtain a mortgage, home ownership might get out of reach, especially for first time home buyers and young Canadians.

But it isn’t just those hoping to buy their first home that are being punished by the Liberal government; it looks like they are also targeting Canadians that run small businesses from parts of their homes.

In the past, when Canadians sold their principal residence they were not required to report the sale nor were they required pay a capital gains tax. However, the Liberals made changes so that starting in the 2016 tax year, it is mandatory to report basic information (date of acquisition, proceeds of disposition and description of the property) on your income tax return when you sell your principal residence.

What’s troubling about this is that the Liberal government is refusing to say if this new reporting rule will eliminate any portion of the capital gains exemption if someone runs a small business from part their home and has ever claimed a Business Use of Home deduction.

Instead of making it more difficult for hard-working Canadians to buy a home, the Liberals should be lowering taxes and giving them the tools they need to save. Likewise, they need to stop