Conservative Leader Pierre Poilievre proposes eliminating the federal sales tax on new construction homes, saying this will help reduce mortgage costs and speed up home construction.
Poilievre said at a news conference in Ottawa on Monday that as prime minister he would eliminate the goods and services tax or harmonized sales tax on new homes selling for less than $1 million.
Poilievre said this tax cut could save Canadians $40,000 in total or $2,200 a year in mortgage payments on an $800,000 home and help build 30,000 new homes each year.
“We will also reduce bureaucracy. “We are going to cut programs that the Liberals themselves admit have not built housing,” he told reporters.
Poilievre said he would eliminate the Liberal government’s Housing Accelerator Fund and the Canada Housing Infrastructure Fund to pay for the sales tax cut.
Over several years, this plan would save the government a total of $8 billion, he added.
In Canada, home buyers only have to pay GST/HST when purchasing a new home directly from the developer.
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According to the Canada Revenue AgencySales of used, owner-occupied homes are typically exempt from GST/HST.
“In most cases, GST/HST does not apply to the sale of an owner-occupied home, since the owner is not a builder. Only homes sold by builders are subject to taxes,” the CRA states on its website.
Poilievre said that without the tax on new construction homes, companies will pass those savings on to consumers, “because if they don’t, buyers will buy from someone else.”
The Greater Ottawa Home Builders Association welcomed the Conservative proposal and said this change would mean new townhouses in the capital would be eligible for a full GST refund.
The association estimates that government-imposed taxes and fees, including HST, account for approximately 20 percent of the average cost of a new home in the capital.
“Increasing the GST refund threshold will support affordability, increase housing supply, and restore equity for current and future generations of homebuyers,” Jason Burggraaf, executive director of GOHBA, said in a statement.
Starting December 15, first-time homebuyers, as well as those purchasing new construction, will soon be able to take out insured mortgages with a 30-year amortization, compared to the typical payback period of 25 years.
In an announcement last month, Deputy Prime Minister and Finance Minister Chrystia Freeland said the maximum price for taking out insured mortgages would be raised to $1.5 million, compared to the previous limit of $1 million.
Meanwhile, the federal government last week announced reduced immigration goals for the next three years, which some experts say will have an impact on housing affordability as early as next year.
The Liberal government plans to build almost 3.9 million homes by 2031 as part of an ambitious housing plan unveiled earlier this year.
The parliamentary budget officer has estimated that Canada would need to build 3.1 million homes by 2030 to close the housing gap.
Immigration Minister Marc Miller said last week that reduced immigration targets could reduce Canada’s housing need by up to 670,000 units by the end of 2027.
– with files from Craig Lord and Uday Rana of Global News and The Canadian Press.
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