New Year, New Taxes
Feb 02, 2023
Feb 02, 2023
As we roll into 2023, there have been some changes to existing taxes, additional taxes, and some first-time homebuyer incentives to be aware of. Whether you currently own, or plan to in the near future we have broken down the important taxes to be made aware of.
Vancouver homeowners are required to submit a declaration each year to determine if their property is subject to the Empty Homes Tax. The Vancouver City council in 2022 voted to increase the city’s empty home tax from 3% to 5% for the 2023 reference year.
What is the Empty Homes Tax?
This is a yearly tax applies to any homes or properties in the Vancouver area that are left unoccupied for more than 6 months in a given year. Properties deemed or declared “empty” in 2022 will be subject to a tax of 5% on the property’s assessed value. There are some exemptions to this tax, so be sure to check out the link below to see if you qualify.
For more information about the City of Vancouver’s Empty Homes Tax: Click Here
**A reminder that the declaration deadline is Feb 2, 2023**
Effective January 2023, the new anti-flipping rules apply to anyone purchasing residential real estate and sell within 1 year of their purchase. The tax is intended to significantly slow down the rapid rate of home price escalation from speculative demand.
Under the new rules, any profit from the sale of residential real estate (including rental property) within a year would be taxed as business income and ineligible for either the 50 per cent capital gains rate or the principal residence exemption. In addition, there is a principal residence exemption for individuals selling their primary residence. However, profits from flipping properties are fully taxed and not eligible for either capital gains inclusion or the principal residence exemption.
For more information about the Residential Anti-Flipping Rule: Click Here
Starting in April 2023, the federal government proposed the introduction of the Tax-Free First Home Savings Account (FHSA). This new registered plan would give prospective first-time home buyers the ability to save $40,000 on a tax-free basis. Like a Registered Retirement Savings Plan (RRSP), contributions would be tax-deductible, and withdrawals to purchase a first home—including from investment income—would be non-taxable, like a Tax-Free Savings Account (TFSA).
If buying a home is in the plans in the near future then channelling some money and utilizing the governments new program may be a good option to explore.
For more information on the new FHSA: Click Here
The proposed changes would increase the amount used to calculate the HBTC to $10,000 (up from the previous $5000), which would provide a tax credit of up to $1,500 to eligible home buyers.
For more information about the new HBTC: Click Here
The home accessibility tax credit has also been doubled from $10,000 to $20,000. It can be claimed for renovation costs in making homes safer or more accessible for seniors, people over 65, or people with disabilities.
For more information about the changes to the HATC: Click Here
Have any questions on how these taxes may impact you? We would be more than happy to chat through any questions on how this could affect you and your own unique situation. We are always here to help!
*Disclaimer* This blog post provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal or tax questions you should consult a lawyer or professional accountant.