OTTAWA UNVEILS NEW RULES ON FOREIGN OWNERSHIP OF CANADIAN HOMES

Oct 03, 2016

By Bob Komsic

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The Trudeau government’s taking steps aimed at limiting foreign money in Canadian real estate, as well as ensuring borrowers take on mortgages they can afford.
bill-morneau
(Adrian Wyld / Canadian Press)
Federal Finance Minister Bill Morneau says the national housing market is sound but that the government’s addressing factors that could lead to excess risk.
As a result, the government’s closing a loophole in the tax laws that allows non-residents to buy homes here, then get a tax exemption to avoid paying capital gains when they sell by claiming it as a principal residents.
Starting immediately, anyone not a resident in the year they acquire a residence will not be able to claim the exemption for that year.
Canadians who were legitimate residents both at the time of purchase and sale will still be able to take advantage of the exemption.
In addition, from now on, all insured mortgages must undergo a ”stress test” that ensure a borrower’s ability to make their payments at a higher interest rate.
Anyone who already has a mortgage or who’s applied for mortgage insurance is exempt from the rules that formally kick in October 17.
The changes come as concern mounts that housing in the GTA and Vancouver markets have become increasingly unaffordable for many.
Vancouver slapped a 15% surtax on foreign buyers in August.
Canadian Imperial Bank of Commerce expects Toronto will have ”no choice” but to do the same at some point.
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