How the recent federal government’s announcements might impact you

The federal government made several announcements claiming it will improve access to the housing market for first-time buyers.

The announcements include:

• Increasing the maximum amortization period to 30 years from 25 for first-time buyers purchasing a new-build property with a down payment of less than 20%, otherwise known as a default-insured mortgage. This change will take effect August 1 of this year, although the government hasn’t specified if this applies to the date of the mortgage application or the funding date.
• Increasing the Home Buyers’ Plan limit to $60,000 from $35,000. This federal program allows first-time homebuyers to withdraw funds from their Registered Retirement Savings Plan (RRSP) tax-free as long as they are used towards the purchase of their first home and are repaid within the subsequent 15 years. This change will take effect April 16, 2024, the day of the federal budget.
• First-time homebuyers who withdraw from their Home Buyers’ Plan between January 1, 2022 and December 31, 2025 will see their repayment grace period extended by three years. These buyers will now have a grace period of up to five years before they are required to start making repayments. Under the current rules of the Home Buyers’ Plan, first-time homebuyers are required to start repaying the withdrawn amount back into their RRSPs within two years after the end of the year in which they withdrew the funds. However, the proposed change extends this repayment grace period by an additional three years.
• Changes to the Canadian Mortgage Charter that allow for permanent amortization relief for qualifying existing homeowners. While there are few details about this change, the government says this relief will be made available to “at-risk” existing homeowners who meet specific eligibility criteria. You can read the full release from the federal government here.

While there are some concerns about the increased amortization limit being restricted to new builds, this change will help those first-time buyers qualify for a mortgage. Having the option of a longer amortization period means they can benefit from lower monthly mortgage payments, in turn resulting in greater flexibility and reduced financial strain.

These measures are part of the federal government’s just-released strategy to help address the country’s housing affordability crisis. Its plan, Solving the housing crisis: Canada’s Housing Plan, will be tabled in this week’s budget and includes a list of new promises and measures, including a plan to unlock 3.87 million new homes by 2031.

I understand that keeping up with the ever-changing landscape of mortgage rules and regulations can feel daunting. However, I’m here to simplify the process for you.

If you’re considering taking advantage of these opportunities or have any questions about how any of these changes may affect you, please don’t hesitate to reach out.

As the April tax deadline approaches, understanding the plethora of tax credits available can be a game-changer for homeowners and first-time buyers. 

Whether you’re stepping into your first home or you’re a seasoned homeowner, being aware of these deductions and programs can significantly impact your tax filings and maximize your return this season. 

GST/HST new housing rebate

• What is it? Recoup a portion of the GST or the federal part of the HST paid for new or renovated homes.
•  Eligibility: Buyers of new homes, constructors of homes, or individuals who have majorly renovated their primary residence.
• Qualifying homes: New or substantially renovated primary residences.
•  Claim process: Submit your claim within two years after the purchase or completion of renovations.

First-Time Home Buyers’ Tax Credit (HBTC)

• What is it? A $10,000 non-refundable tax credit for eligible first-time home buyers, offering up to $1,500 in tax relief.
• Eligibility: First-time homebuyers or those who haven’t owned a home in the previous four years, including the buyer’s spouse or common-law partner.
• Qualifying homes: Primary residences in Canada.
• Claim process: Claimed in the tax year when the home is purchased, on line 31270 of your tax return.

 Home Accessibility Tax Credit (HATC)

• What is it? Offers a 15% non-refundable tax credit on up to $10,000 of eligible home renovation expenses, for a maximum of $1,500 in tax relief per year.
•  Eligibility: Homeowners making accessibility-related renovations to accommodate seniors or individuals with disabilities.
• Qualifying renovations: Changes made to improve accessibility or help a senior or a person with a disability be more functional or mobile at home.
• Claim process: Claimed in the tax year when the expenses were incurred.

Multigenerational home renovation tax credit

• What is it? Provides up to $7,500 in tax relief for eligible renovations to accommodate a senior family member or an adult with a disability.
•  Eligibility: Homeowners undertaking renovations to create a secondary dwelling for a senior or a person with a disability.
•  Qualifying renovations: Renovations that enable the senior or adult with a disability to live with a relative in a secondary dwelling.
• Claim process: Available for expenses incurred after the tax year it was introduced.

Rental income deductions

• What is it? Allows landlords to deduct expenses related to generating rental income, including mortgage interest and property taxes.
• Eligibility: Property owners who earn rental income from residential or commercial properties.
•  Qualifying expenses: Mortgage interest, property taxes, maintenance costs, utilities, and insurance.
• Claim process: Expenses are deducted in the tax year they are incurred.

Note this list isn’t exhaustive, and specific provinces may offer additional deductions and credits not covered here.

Notice on Canada’s Underused Housing Tax (UHT)

Effective since 2022, Canada’s UHT imposes a 1% tax on underused foreign-owned properties, though it also has tax filing implications for those with rental units, or with properties held in partnerships or bare trust agreements, in order to claim exemptions. Anyone impacted by this tax is strongly encouraged to consult a tax professional to ensure adherence and avoid penalties.

If you have any questions about navigating these tax credits, please don’t hesitate to reach out. 

Should you need more detailed tax advice, I’d be happy to refer you to a certified tax professional who can provide you with personalized guidance and inform you of other programs that may apply to your situation. Let’s make sure you’re getting the most out of your home-related tax opportunities this season!

Call me today!  

Barb Eglauer
Mortgage Agent
(780) 720-5185
barb.eglauer@mortgagegroup.com

I think it’s safe to say we’re all eagerly anticipating the arrival of spring as the snow melts and the days grow longer. 

It’s a season of renewal, not just for nature but also for the real estate market as both homebuyers and sellers come out of hibernation and prepare to make their next big move. 

If you plan to count yourself among one of these groups—or maybe both—the following are some tips to help ensure a smooth and successful process as either a homebuyer or a home seller.

For homebuyers

1. Secure a mortgage pre-approval: Starting the home buying process with a mortgage pre-approval is crucial. It not only gives you a clear idea of the budget you have to work with, but also positions you as serious contender in the eyes of sellers and may protect you in the event rates start to rise. Gather your financial documents early and give me a call so I can help you fully understand your borrowing capacity.

2. Understand the market: Familiarize yourself with the local real estate market trends, including average home prices, inventory levels and the average time homes spend on the market. This knowledge can help inform your search and negotiation strategy and help set appropriate expectations. If you need a referral to an amazing realtor, I’m happy to connect with you with one.

3. Consider future needs: Think long-term about your housing needs. Factors like family planning, work-from-home requirements, and lifestyle should play into your decision-making process. Investing in a home that meets future needs can prevent costly moves down the line.

For home sellers

1. Get a mortgage pre-approval: As a seller, you should also secure a mortgage pre-approval. This step is vital for understanding how much you can afford in your next purchase and for making timely offers once your current home is sold.

2. Investigate mortgage porting: If you have an existing mortgage, understanding its portability is essential as porting a mortgage may offer financial benefits and ease the transition to a new property. As a broker, I can help you understand your current mortgage’s portability features and any applicable fees or conditions that may be involved. Additionally, if your mortgage is not portable or if it makes sense to break your existing mortgage term, I can provide the necessary information to help you decide the best timing of your sale.

3. Find a reliable Realtor partner: Choosing the right real estate agent is critical for a smooth sale. Look for agents with a strong track record in the local market, excellent negotiation skills, and a comprehensive marketing plan. A good agent can significantly impact the selling price and how quickly the property sells. I’d be happy to make an introduction for you. 

4. Prepare the home for sale: Prepare your home for the market by addressing repairs, decluttering, and possibly staging the property. A well-presented home can attract more buyers and lead to higher offers. Investing in professional photography can also showcase the property in its best light online, where most buyers start their search.

By following these steps, you’ll be in a position to navigate the spring real estate market with confidence. 

If you’re planning to buy or sell this coming spring season, don’t hesitate to reach out. I would be happy to go over additional tips that could help you as either a buyer or a seller. 

Call me today!  

Barb Eglauer
Mortgage Agent
(780) 720-5185
barb.eglauer@mortgagegroup.com