He said the budget contains a new housing initiative that exempts payment of property transfer taxes on newly built homes, including condominiums, priced up to $750,000. The current property transfer tax is set at one per cent on the first $200,000 and two per cent on the remaining price.
De Jong said the exemption will save the buyer of a new home $13,000. Buyers of older homes will continue to pay the property purchase tax at the current rates.
"We are hoping this will create an incentive to construct more, develop more housing," he said. "This is a big change. We'll be tracking closely the changes they have on market and market behaviour. "
De Jong said much of the New Housing exemption will be funded with the creation of a third tier of property transfer tax. The tax involves increasing the property transfer tax rate to three per cent on the value of a home over $2 million.
Buyers of property above $2 million will still pay the existing purchase tax rates of one per cent on the first $100,000, two per cent up to $2 million, but it rises to three per cent tax on any value above $2 million.
De Jong said the three per cent tax is estimated to raise $75 million annually, the amount the government estimates it will need to offset the exemptions for new home buyers.
He said the property transfer tax changes also include measures to collect better data on the identities of home buyers.
Property buyers will be required to disclose their citizenship, said de Jong. The disclosures will generate data that allows the government to monitor the volume of foreign investment, de Jong said.
"The government stopped collecting data that specifically identified foreign purchasers in 1998," said de Jong. "We believe there is a legitimate need to resume that process again."