Tax brackets shifted to account for inflation. The government of Canada adjusted tax brackets for 2022. This was to maintain the buying power for Canadians as prices of goods continued to increase. The new federal tax brackets for 2022 are $0 to $50,197 of income (15%) and more than $50,197 to $100,392 (20.5%).
Overall, the average commercial-to-residential tax ratio in the year 2022 was 2.80. So, it reflects a slight increase of 2.42 percent from the year 2021 average ratio of 2.73. Typically, the property tax rates range from 0.5 percent to 2.5 percent.
FHSA Or First Home Savings Account
The First Home Savings Account (FHSA) allows homebuyers to save up to $40,000 for a home purchase. And this is with a maximum annual contribution of $8,000 over five years. Here, contributions to the FHSA are tax-deductible, and withdrawals to purchase a home are tax-free.
Another new tax benefit related to housing is the Multigenerational Home Renovation Tax Credit. Here, the refundable tax credit will provide up to $7,500. And this supports constructing a secondary suite for a senior with a disability to live with family members.
Again, eligible families may claim 15 percent of a maximum of $50,000 in home renovation. They can also claim construction costs to build a secondary housing suite.
The government of Canada brought in a new rule in Budget 2022. This new tax rule has effectively increased taxes on home-flipping. Here, the change means the government shall assume anyone who sells a home after possessing it. And, this for less than 12 months shall be considered flipping the property. And profits from the sale shall be considered business income, not capital gain.
Plus, the government is equally introducing an Underused Housing Tax or UHT. So, the UHT is a national and annual 1 percent tax on the value of vacant, underused residential property. It is owned directly or indirectly by non-residents or non-Canadians.
As a result, any non-resident or non-Canadian, who owns an underused or vacant residential property in the country is liable to pay the tax. The owner of the vacant property, as of December 31, 2022, must file a UHT return. The UHT return file for the property should be complete by April 30, 2023.
Other Tax Changes
- The federal government has indexed personal income tax brackets. And many tax benefits for inflation. So, these will increase by 6.3 percent this year, according to the Canada Revenue Agency.
- Also, the Basic Personal Amount, or the amount of income exempt from tax, increased to $15,000 this year, up from 14,398 in the year 2022.