Latest news with #KariNorman
Vancouver Sun
19 hours ago
- Business
- Vancouver Sun
Ottawa's GST rebate on new homes would save typical first-time buyer $27K: PBO
The parliamentary budget officer says an eligible first-time homebuyer would save an average of $26,832 in sales tax on the price of a newly built home under Ottawa's latest housing proposal. In a new analysis released Wednesday, the federal government's fiscal watchdog predicts that 71,711 new builds would qualify for GST relief over the lifetime of the program. The proposal would see the federal portion of the sales tax eliminated on a new home worth up to $1 million if it's bought by a qualifying first-time homebuyer. Start your day with a roundup of B.C.-focused news and opinion. By signing up you consent to receive the above newsletter from Postmedia Network Inc. A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Sunrise will soon be in your inbox. Please try again Interested in more newsletters? Browse here. The GST rebate would be phased down as the price of the home approaches $1.5 million. Homes bought from May 27 through to 2031 can qualify for the rebate, as long as construction starts before 2031 and finishes by 2036. Canadians who have owned a home already are not eligible for the GST relief — with some exceptions. Neither are investors. The PBO forecasts the program will cost $1.9 billion over six years, while the federal government has pegged the 'tax savings' for Canadians at $3.9 billion over five years. The PBO's latest cost estimate is about $100 million lower than the figure it cited during the spring federal election, when the GST break was proposed. It attributes that gap to a later implementation date and a different definition used for first-time homebuyers. A Desjardins Economics analysis of the proposal released Monday offered one explanation for the discrepancy between the PBO's cost estimate and the government's figure: Ottawa might think its program will be more popular than the PBO does. A higher cost estimate suggests more first-time homebuyers purchasing qualifying new builds, in other words. The GST rebate, which is not yet law, was included in the Liberals' spring election platform as a way to help Canadians break into the housing market. A home priced at $1 million would receive the maximum rebate of $50,000. Homes priced below that amount would still get the full rebate – but since the sales tax is a smaller share of the final cost, the rebate would be lower as well. The rebate also would be lower than $50,000 for homes sold above $1 million because the rebate gradually ramps down until it zeroes out at a purchase price of $1.5 million. The Desjardins report by economist Kari Norman said that if the program proves popular with first-time buyers, it could spur additional housing construction to meet higher demand. The PBO said it does not include possible behavioural responses to the program in its analysis. Norman noted in her report that it's also possible increased demand from homebuyers will push up home prices in the near-term. She estimated that 85 per cent of new homes built in Canada over the program timeframe will be eligible for the full GST break of up to $50,000. In cases where the GST portion of a new home sale is rolled into the mortgage principal, the typical owner could expect to save $240 per month on mortgage payments, she said. The savings are more direct when a developer charges the GST upfront. The measure is packaged in legislation that also includes the Liberals' promised income tax cut, which is set to take effect July 1. This report by The Canadian Press was first published June 11, 2025. Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark and sign up for our daily newsletter, Posted, here .
Vancouver Sun
2 days ago
- Business
- Vancouver Sun
GST cut for new homebuyers could mean price hikes, bank warns
OTTAWA — The federal government's plan to eliminate the GST on first-time homebuyers' purchases of most new homes may actually lead to higher prices, a new report says. The report, by Desjardins Economics' Kari Norman, found that the federal policy to eliminate or reduce the GST on newly built homes priced up to $1.5 million for first-time homebuyers may cut upfront costs. But without a corresponding increase in the supply of homes to quell the housing crisis, the bank economists say, the federal policy may just boost demand and the home prices that the government intends to help suppress. The report also warns that the rebate could distort the market because homebuilders might anticipate homebuyers' increased purchasing power and simply raise sticker prices on new homes. Another possible problem is that the rebate might encourage first-time buyers to rush purchases in anticipation of rising prices, Desjardins says, leading to a short-term sales spike that would likely be followed by a slump. Start your day with a roundup of B.C.-focused news and opinion. By signing up you consent to receive the above newsletter from Postmedia Network Inc. A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Sunrise will soon be in your inbox. Please try again Interested in more newsletters? Browse here. 'While the policy is intended to improve affordability, in the near term it may instead inflate prices or compress inventory,' the report said. With the federal Parliamentary Budget Officer set to release an assessment Wednesday on the fiscal costs of the GST rebate on first-time homebuyers, Desjardins voiced concern that the policy will also mean that the benefits to buyers may be partly offset if the increased demand for homes leads to an increase in the costs of labour and building supplies. 'This could dilute some of the intended benefit, especially in overheated markets,' the report said. Instead, Desjardins suggests that Ottawa mitigate the risk of demand outpacing supply by bundling the GST rebate with policies that would accelerate the pace of home building. The report says those other policies include streamlining permitting processes, investing in innovative practices, addressing skilled labour shortages and improving zoning flexibility. Paul Smetanin, the president of the Canadian Centre for Economic Analysis, said he agrees with Desjardins' concern about the GST rebate because the policy will increase demand and prices and give developers the chance to simply increase profits. Smetanin said Canada's housing crunch is a supply problem that needs supply solutions. In particular, he said, the three levels of government need to work together to address the infrastructure deficits — namely water, sewer, electricity — that exist in many communities lacking homes. 'On its own, it's not going to work,' he said of the GST rebate plan. Despite that, Smetanin said he appreciates Ottawa's attempt to cut the taxes on housing developments, which he has calculated to be about 36 per cent on a new $1 million home. The primary taxes are development charges, property transfer taxes and sales taxes. The federal government's proposed policy, a key piece of its response to the political grenade that the housing crisis has become, is to eliminate the GST on newly built homes up to $1 million for first-time buyers and reduce the federal tax for those same buyers on homes priced up to $1.5 million. If the policy, which was introduced as legislation June 5, doesn't spur an increase in the housing market, the GST rebate would reduce a home buyer's mortgage by about $240 per month on a $1 million home. The legislation, part of a broader package that includes an income tax cut, would take effect July 1. It would apply to homes bought between May 27 of this year and 2031. The Desjardins report says that about 85 per cent of all new home purchases would qualify for the full rebate, while 95 per cent of new builds in most major centres would fit under the $1.5 million ceiling. That figure drops slightly in the country's two most expensive major markets, 92 per cent in Toronto, and 75 per cent in Vancouver. According to a study conducted by the Parliamentary Budget Officer during the recent federal election campaign, the proposed rebate would likely add about $2 billion to federal debt over the next five years. Those figures, however, don't account for the increased spending that would likely occur if there were more new homeowners spurring additional construction and the consumer purchases that go with it. The Liberals also vowed to make the housing market more affordable by simplifying national building codes and investing in prefabricated construction. National Post Get more deep-dive National Post political coverage and analysis in your inbox with the Political Hack newsletter, where Ottawa bureau chief Stuart Thomson and political analyst Tasha Kheiriddin get at what's really going on behind the scenes on Parliament Hill every Wednesday and Friday, exclusively for subscribers. Sign up here . Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark and sign up for our daily newsletter, Posted, here .
Edmonton Journal
2 days ago
- Business
- Edmonton Journal
GST cut for new homebuyers could mean price hikes, bank warns
Article content OTTAWA — The federal government's plan to eliminate the GST on first-time homebuyers' purchases of most new homes may actually lead to higher prices, a new report says. The report, by Desjardins Economics' Kari Norman, found that the federal policy to eliminate or reduce the GST on newly built homes priced up to $1.5 million for first-time homebuyers may cut upfront costs. But without a corresponding increase in the supply of homes to quell the housing crisis, the bank economists say, the federal policy may just boost demand and the home prices that the government intends to help suppress.
Calgary Herald
2 days ago
- Business
- Calgary Herald
GST cut for new homebuyers could mean price hikes, bank warns
OTTAWA — The federal government's plan to eliminate the GST on first-time homebuyers' purchases of most new homes may actually lead to higher prices, a new report says. Article content The report, by Desjardins Economics' Kari Norman, found that the federal policy to eliminate or reduce the GST on newly built homes priced up to $1.5 million for first-time homebuyers may cut upfront costs. But without a corresponding increase in the supply of homes to quell the housing crisis, the bank economists say, the federal policy may just boost demand and the home prices that the government intends to help suppress. Article content Article content Article content The report also warns that the rebate could distort the market because homebuilders might anticipate homebuyers' increased purchasing power and simply raise sticker prices on new homes. Another possible problem is that the rebate might encourage first-time buyers to rush purchases in anticipation of rising prices, Desjardins says, leading to a short-term sales spike that would likely be followed by a slump. Article content Article content With the federal Parliamentary Budget Officer set to release an assessment Wednesday on the fiscal costs of the GST rebate on first-time homebuyers, Desjardins voiced concern that the policy will also mean that the benefits to buyers may be partly offset if the increased demand for homes leads to an increase in the costs of labour and building supplies. Article content Instead, Desjardins suggests that Ottawa mitigate the risk of demand outpacing supply by bundling the GST rebate with policies that would accelerate the pace of home building. The report says those other policies include streamlining permitting processes, investing in innovative practices, addressing skilled labour shortages and improving zoning flexibility. Article content Paul Smetanin, the president of the Canadian Centre for Economic Analysis, said he agrees with Desjardins' concern about the GST rebate because the policy will increase demand and prices and give developers the chance to simply increase profits.
National Post
2 days ago
- Business
- National Post
GST cut for new homebuyers could mean price hikes, bank warns
OTTAWA — The federal government's plan to eliminate the GST on first-time homebuyers' purchases of most new homes may actually lead to higher prices, a new report says. Article content The report, by Desjardins Economics' Kari Norman, found that the federal policy to eliminate or reduce the GST on newly built homes priced up to $1.5 million for first-time homebuyers may cut upfront costs. But without a corresponding increase in the supply of homes to quell the housing crisis, the bank economists say, the federal policy may just boost demand and the home prices that the government intends to help suppress. Article content Article content Article content The report also warns that the rebate could distort the market because homebuilders might anticipate homebuyers' increased purchasing power and simply raise sticker prices on new homes. Another possible problem is that the rebate might encourage first-time buyers to rush purchases in anticipation of rising prices, Desjardins says, leading to a short-term sales spike that would likely be followed by a slump. Article content Article content With the federal Parliamentary Budget Officer set to release an assessment Wednesday on the fiscal costs of the GST rebate on first-time homebuyers, Desjardins voiced concern that the policy will also mean that the benefits to buyers may be partly offset if the increased demand for homes leads to an increase in the costs of labour and building supplies. Article content Article content Instead, Desjardins suggests that Ottawa mitigate the risk of demand outpacing supply by bundling the GST rebate with policies that would accelerate the pace of home building. The report says those other policies include streamlining permitting processes, investing in innovative practices, addressing skilled labour shortages and improving zoning flexibility. Article content Paul Smetanin, the president of the Canadian Centre for Economic Analysis, said he agrees with Desjardins' concern about the GST rebate because the policy will increase demand and prices and give developers the chance to simply increase profits.
