Canada announces new housing market rules

By anna smith

Yesterday, we posted a story about an upcoming official announcement on Canada’s housing market. Finance Minister Bill Morneau announced the new rules in Toronto today. Here’s what we know:

Foreign money in Canadian real estate will be limited

There will be a move to close a loophole in current tax laws that enable non-residents to buy homes in Canada. Currently, foreigners buying homes get a tax exemption to avoid paying capital gains when they sell the home by claiming it’s a principal residence.

"An individual who was not a resident in Canada in the year the individual acquired a residence will not be able to claim the exemption for that year," Morneau said.

"There's a lot of people who are declaring their homes as principal residences when they're not," said Toronto real estate lawyer Bob Aaroon in an interview. "I think it's more of cracking down on the existing law rather than plugging a loophole."

All insured mortgages must undergo a “stress test”

Borrowers will be tested against their ability to pay their mortgage if actual rates were as high as the big bank's five-year posted mortgage rates. The Bank of Canada says these rates currently average 4.64 per cent. 

"This measure will make it harder for buyers to qualify for a loan, especially in high-priced regions," said BMO economist Sal Guatieri. "This means that many potential buyers won't qualify for an insured mortgage, which requires the total carrying costs of a home ... to consume no more than 39 per cent of gross family income"

Follow @BizReviewCANADA

Read the September 2016 issue of Business Review USA & Canada magazine

SOURCE: [Business Insider]


Featured Articles

Amelia DeLuca, CSO at Delta Air Lines on Female Leadership

Driving decarbonisation at Delta Air Lines, Chief Sustainability Officer Amelia DeLuca discusses the rise of the CSO and value of more women in leadership

Liz Elting – Driving Equality & Building Billion-$ Business

Founder and CEO Liz Elting Turned Her Passion into Purpose and Created a Billion-Dollar Business While Fighting for Workplace Equality – and Winning

JPMorgan Chase: Committed to supporting the next generation

JPMorgan has unveiled a host of new and expanded philanthropic activities totalling US$3.5 million to support the development of apprenticeship programmes

How efficient digital ecosystems became business critical

Technology & AI

Mastercard: Supporting clients at a time of rapid evolution

Digital Strategy

Why Ceridian has boldly rebranded to Dayforce

Human Capital