Parliament Hill in Ottawa - Ontario, Canada

Canadians will be able to save for a first home using a new registered plan, and real estate flippers will pay full tax on the profits of a home sold within 12 months of acquisition, as the government’s bill to implement those measures and others received royal assent on Thursday.

Bill C-32, which passed as the Fall Economic Statement Implementation Act, 2022, implements measures from the Nov. 3 fall economic statement, the 2022 federal budget and previous budgets.

The Tax-Free First Home Savings Account (FHSA) allows first-time homebuyers to save for a down payment on a tax-free basis. As with an RRSP, contributions to an FHSA are tax-deductible, and withdrawals to purchase a first home — including from investment income — are non-taxable, as with a TFSA. There is an annual contribution limit of $8,000 and a lifetime contribution limit of $40,000. The FHSA has an effective date of April 1, 2023.

Under the anti-flipping rule first introduced in the 2022 federal budget, an individual who sells a residence within 12 months of acquiring it will be deemed to have flipped it unless they qualify for an exemption due to a “life event,” such as divorce or a death.

Any profit from the sale of residential real estate (including rental property) within a year would be taxed as business income and be ineligible for either the 50% capital gains rate or the principal residence exemption. The new tax treatment for flipped homes extends to assignment sales. The anti-flipping rule becomes effective Jan. 1, 2023.

Other key measures included in the Fall Economic Statement Implementation Act, 2022 include: