Quebec announces tax incentives for first-time homebuyers

Quebec wants to facilitate first-time homeownership with new tax incentives announced Thursday by Finance Minister Eric Girard.

At a time when the real estate market is in turmoil across the country, the Legault government will modify its regulations and harmonize its programs with those put in place by the federal government.

The preferred tool will be the Tax-Free Savings Account (TFSA).

Ottawa created a TFSA for first-time home buyers in April, to come into effect in 2023. Money saved in the account is not subject to tax, and withdrawals made for the purpose of acquiring a first home aren't taxable.

For the Quebec treasury, this loss of annual revenue will be $75 million.

Girard said now is the perfect time to go in this direction, as the marked increase in real estate prices appears to be running out of steam.

"We had a market that was in total turmoil and we have a market that is slowing down, so this is a time that is more appropriate to introduce such a measure," he said.

Quebec is also increasing the tax credit for first-time home buyers from $750 to up to $1,500. About 70,000 first-time homebuyers could take advantage of the credit each year and will be able to benefit from it as of 2022.

Other tax measures announced Thursday are aimed at addressing labour shortages.

To retain employees ready to retire, Quebec is waiving the 5,000-hour requirement for businesses to receive a refundable tax credit. This measure targets approximately 28,000 workers and 13,000 businesses. Quebec is also removing the 5,000 hour requirement for the tax credit available to those with severe employment constraints.

The news was well-received by the business community.

"We're really happy" with the change in direction, said François Vincent, Quebec vice-president of the Canadian Federation of Independent Business (CFIB).

He said the measure will "removes barriers" for small and medium-sized enterprises.  

This report was first published by The Canadian Press on June 9, 2022.