Ottawa’s Overhaul; Explanations Offered

The government of Canada is trying to have the overheating real estate market in Canada regulated and stabilized, as well as have the citizens of Canada be prevented from going into debt while keeping investment in Toronto and Vancouver’s real estate markets by foreigners on a steady flow.

The Minister of Finance, Bill Morneau made public earlier this month a significant stir in the country’s mortgage and foreign ownership rules for the housing market. There were some changes that occurred as the rules began to take effect.

The stress tests will not only be limited to just mortgages where the potential buyer have to put at least 20 per cent of the purchase price as a down payment i.e. it is not just for insured mortgages. It will become difficult for some buyers to acquire insured mortgages, despite their huge sum of down payment, as it will end the bilateral system which scales the mortgages in a different way contrary to the earnings of the buyers to determine if they can afford the mortgage.

In the same year homebuyers purchase a house in Canada, they should also have their taxes filed as a resident, in order for them to be given the right to be entitled to the main residence exception on any increase for that period. Tax loopholes that allow the foreign buyers to be an exceptional case in capital-gains tax for selling assets which are wrongly claimed as their main dwelling place.

Putting into practice consultations that will help banks take on more lending risks, which will have the load lifted off in Ottawa’s responsibilities to pay for insured mortgages in the event of the crash in the real estate market. This could also cause the mortgage rates to increase.

To have the security of the portfolio insurance readjusted, and a type of bulk coverage for 20 per cent or more down payments on mortgages.