Homeowners and prospective homebuyers in Canada could be opening new doors of opportunity when it comes to housing affordability. In last Thursday’s 2022 federal budget announcement, the Government of Canada set out new measures to address nationwide sky-high housing prices, low supply, and a surplus of demand for homeownership.

Bidding wars and inflated home prices have left many Canadians priced out of the current housing market. According to the Canadian Real Estate Association, the national average home price reached $816,720 in February. But this year’s budget seeks to make room for a new generation of homebuyers and provide more support for multi-generational homeowners.

Here is a roundup of the six major housing-related proposals put forth by the federal government in last week's budget announcement.

1. Temporary foreign buyers ban

The federal government plans to ban non-residents from purchasing residential property in Canada for the next two years.

However, refugees, international students, soon-to-be permanent residents, and those with work permits are not subject to the ban. The ban will allow the government time to examine the impact foreign money has on Canadian housing costs and could be prolonged if necessary.

2. The Tax-Free First Home Savings Account (FHSA)

First-time homebuyers may soon have access to a new tax-free savings vehicle that includes tax-deductible contributions (unlike the current TFSA) of up to $40,000 and tax-free withdrawals for purchasing their first home. The savings account would also allow for tax-free investment growth. However, there will be an annual $8,000 contribution limit and any leftover contribution room you may have will not carry over to next year’s limit.

Homebuyers can still fund their home purchase with an up to $35,000 withdrawal from their RRSP under the Home Buyers’ Plan, but must repay the amount. And withdrawals can only be made from one of two accounts — the FHSA or the RRSP — to pay for the home.

3. Doubling of the First-time Homebuyers’ Tax Credit

In an effort to make purchasing a home a realistic goal, the First-time Homebuyers’ Tax Credit is promised to double from $5,000 to $10,000, providing buyers a $1,500 tax rebate on their home purchase instead of the current $750.

4. Creation of a Home Buyers’ Bill of Rights

A whopping $5 million in funding will be set aside over the next two years to give homebuyers the legal right to a home inspection and to end blind bidding wars for more buyer transparency.

Part of this will include extending anti-money laundering financing requirements to unregulated mortgage lenders in a year’s time.

5. Multigenerational Home Renovation Tax Credit

The 2022 budget includes a new tax credit of up to $7,500 to put toward home renovations that accommodate households with adult family members who require extra care. For example, building a secondary suite for a senior citizen or an adult living with a disability.

6. Introduction of a house flipping tax

After Jan. 1, 2023, those who flip houses to make a quick profit would be subject to new tax rules. Any sale of a new or heavily renovated residential property that’s been owned for less than 12 months will be fully taxed and treated as business income.

There are exemptions, however, such as needing to sell due to a new job, a divorce, or the birth of a child.

Is now the time to take out a mortgage?

The measures put forth by the Canadian government have the potential to lead to more affordable housing, more market selection, more secure purchases, and fewer taxes owed on your investment. But some experts have already cast doubt over the efficacy of these proposed changes.

As well, the Bank of Canada is expected to raise its borrowing rate on Wednesday, April 13 by 50 basis points. This means lenders across Canada will increase mortgage interest rates, making it more expensive to finance a home. Now might be the best time to shop around and find the best mortgage rate and avoid steeper rates in the coming months.