March 6, 2010
After Flaherty announced his budget that will reduce Canada’s deficit over the next 5 years, which is exactly what international investors were looking for from Canada, it became clear that affordable housing was not at the top of the government’s agenda.
Okay, so Flaherty did a few things, but they were mostly keeping budgetary measures implemented in 2009. He maintained the ability for Canadians to withdraw up to $25 000 from their RRSP (up from $20 000 in 2008). Also, he kept the tax credit for first-time home buyers.
However, the extremely popular home renovation tax credit was not reinstated. Sorry, Home Depot.
Another important measure that was overlooked in the budget was the GST rebate on new housing. When the GST was introduced in 1991, there was a rebate for houses purchased for less than $350 000. But that amount hasn’t increased since then despite the fact that a home costing $350 000 in 1991 likely costs $550 000 now.
The chief economist of the Canadian Real Estate Association (CREA), Gregory Klump, suggested that the upper limit on the price of houses included in the rebate should be indexed to inflation to reflect the real value of housing.
The President of the Canadian Home Builders’ Association, Gary Friend, said:
“This is the single most important step the federal government can take to protect housing affordability and choice. What Canadians need now are permanent policies that end the erosion of housing affordability” The Canadian Press
I guess it’s not at the forefront of the federal government’s mind right now. Maybe they think the introduction of the HST and higher interest rates will do their job for them…making housing more affordable, that is.