As part of the Manitoba Budget 2024 titled "One Future. One People. One Manitoba." the provincial government announced a Rental Housing Construction Tax Credit (RHC), effective for the 2024 tax year, as an added incentive for affordable housing.
Manitoba's Minister of Finance, Adrien Sala, announced this and other economic measures in the province's annual budget unveiled last Monday. The RHC is a financial incentive offered to private and non-profit housing developers (including non-profit co-operatives) to address the persistent shortage of rental housing in Manitoba communities. The Manitoba government believes that "this credit will kickstart construction of rental units in the province, including supporting the addition of affordable rental units."
The RHC will provide a tax credit of $8,500 for the construction of new market-rate rental units, and $13,500 for units classified and maintained as affordable units for at least 10 years. If available to you or your organization, this tax credit will directly reduce the amount of tax owing during the 2024 taxation year. To be eligible for the tax credit, construction of the affordable housing must start on or after January 1, 2024.
Emphasis on affordable units
The tax credit will be fully refundable to non-profit organizations, while for other businesses $8,500 per unit will be fully refundable. In addition, a $5,000 non-refundable credit will be available over 10 years for affordable units.
According to a Leger survey, roughly one in two Manitobans worry about paying their rent or mortgage. Though not the highest in the country, Manitoba's average home sale price has nearly quadrupled since January 2000, far outpacing wage gains and population growth. Between 1987 and 2006, Manitoba's population increased by 1.2 new residents per home built. In 2022 this figure was 4.6, the highest in the last 40 years.
As a result, the housing shortage has pushed prices and rents up. The Canada Mortgage and Housing Corporation (CMHC) estimates that 260,000 Manitoba homes must be built by 2030 to restore affordability. Last fall, the Fraser Institute concluded, "unlike many other provinces, provincial and municipal governments in Manitoba have been slow to make policy changes to help boost housing construction. Both levels of government must do more to eliminate barriers to homebuilding in the province." The RHC is a move by the Manitoba government to begin addressing this issue.
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