In reflection of Canada’s rapidly evolving real estate space, the months preceding the Federal Government’s annual budget announcement were ripe with anticipation and speculation surrounding new housing-related initiatives and their implications for Canadians. Upon the budget’s formal arrival in mid-April, some conjectures proved accurate, while others did not. 

In this article, we will offer a critical analysis of the real estate programs included in the 2024 Canadian Federal budget, breaking down their impact on both buyers and sellers. 

---

Approaching the sale of your Toronto property? Consider these additional resources from our site. 

• Essential Considerations For Selling a Condo
• Refined Strategies to Enhance Your Home’s Value
• The Critical Nature of Pricing in Today’s Market

---

Implications for Home Buyers

At a high level, the housing initiatives built into the recent budget proposal primarily intend to reduce or eliminate the financial burdens facing Canadians looking to buy a house. 

Adjustments to Amortization on New Build Homes

The new budget proposes expanded eligibility for thirty-year amortization on new build properties. Under current financial regulations, only uninsured lenders, i.e. buyers placing a down payment in excess of 20% were granted access to amortization across three decades. 

While this initiative may see notable uptake in a national context, its implications for the Toronto market will likely be somewhat limited as new build properties are not commonly found within the city proper. 

Evolving Incentives for First-Time Purchasers

The Home Buyers’ Plan (HBP) is an existing Federal program which permits first-time home purchasers to withdraw from their Registered Retirement Savings Plan (RRSP) without taxation if the funds are used towards a down payment.

Under the current Home Buyers’ Plan, individuals may withdraw up to $35,000. The proposed budget recommends increasing this limit to $60,000. Therefore, if enacted, spouses purchased together would be able to withdraw up to $120,000.  

One critical stipulation to this incentive is that the funds must be repaid within fifteen years. However, the new budget also advocates for a minor extension, deferring the beginning of the repayment period by three years. 

Implications for Home Sellers

One of the Federal budget’s most-discussed proposals is directly related to the sale of real estate. However, its implications do not apply to the significant majority of homeowners. 

Higher Rates Capital Gains Taxation

In Canada, taxation implications for sellers are diverse and dependent on a number of variables.  One of the most influential of these details in taxation is property use. 

Currently, secondary or investment properties are subject to taxation on 50% of profits earned by appreciation upon sale. However, the new budget proposes taxation on 66.6% of profits should they exceed $250,000. Property sales in which gains do not exceed $250,000 would remain subject to the existing 50% inclusion rate. 

It is imperative to understand that capital gains taxation exclusively applies to secondary or investment properties – not principal residence properties. 

What Constitutes a Principal Residence?

The Canadian Revenue Agency (CRA) outlines the following criteria for which homes qualify as a principal residence. 

• It is a housing unit, a leasehold interest in a housing unit, or a share of the capital stock of a co-operative housing corporation you acquire only to get the right to inhabit a housing unit owned by that corporation
• You own the property alone or jointly with another person
• You, your current or former spouse or common-law partner, or any of your children lived in it at some time during the year
• You designate the property as your principal residence

Real estate must meet all four of these characteristics in order to qualify as a principal residence. 

---

Eager to make a seamless real estate investment in 2024? Explore these related readings from our blog. 

• A Buyer’s Guide to Surpassing Competing Offers
• Finding Certainty in an Uncertain Market
• What Are the Associated Costs of Purchasing A Toronto Home?

---

Approaching the Market With Armin Group

Whether you are buying, selling, or looking for advice on other matters related to your home, investment properties, or other assets, Armin Group can guide you toward your goals. While Toronto’s real estate landscape may be competitive, complex, and ever-evolving, our adaptive expertise provides a refined, low-stress experience with uncompromising results. 

Seeking a seamless and personalized real estate experience? As distinguished leaders in luxury Toronto real estate, Armin Group can help. Send us an email, or call our team at 416.960.9995 to begin your journey.