Navigating the New Norm: Federal Budget 2024 and Its Impact on Toronto Real Estate

The 2024 Federal Budget has rolled out, and it’s shaking up the Canadian real estate scene more vigorously than a Toronto Maple Leafs fan at a winning game! If you’re tangled in the web of buying, selling, or just gawking at properties in Toronto, this is your cue to pay attention. Let’s decode what these changes mean for you—whether you’re trying to snag your first home or deciding the right time to sell your estate from Grandma.

Capital Gains Tax: Before and After the Budget

One of the headline changes is the adjustment to capital gains tax, and it’s big enough to make even the savviest investors get a little nervous. Here’s how the tax shake-up could impact your bottom line:

How the 2024 Canadian Federal Budget Affects Individuals Selling Properties:

Before the 2024 Budget:

• Taxable Gain: 50% of your gain was taxable.
• Example: Sell your inherited property for $2.5 million, which you got at $2 million. And by “got,” I mean the value when it was transferred to you.
• Taxable Gain: $500,000 x 50% = $250,000
• Tax Owed: $250,000 x 50% = $125,000

After the 2024 Budget:

• Taxable Gain:First $250,000 gain: 50% = $125,000
• Next $250,000 gain: 66.67% = $166,667
• Total Taxable Gain: $291,667
• Tax Owed: $291,667 x 50% = $145,833
• Bottom Line: You’re paying $20,833 more in taxes—ouch!

How the 2024 Canadian Federal Budget Affects Corporations & Trusts Selling Properties:

It’s a similar vibe but slightly different numbers. Corporations and trusts are hit with a higher rate on the entire gain:

Before the 2024 Budget:

• Tax Owed on $500,000 Gain: $125,000

After the 2024 Budget:

• Tax Owed on $500,000 Gain: $166,667
• Reality Check: That’s an extra $41,667 where you’d rather not see it!

First-Time Home Buyers, the 2024 Federal Budget has some treats for you, too!

If you’re looking to jump into the Toronto housing market without previously owning property anywhere, the new budget throws a couple of sweet lobs your way:

• Higher RRSP Withdrawal Limit: Scoop out up to $60,000 from your RRSPs tax-free to fund your first home purchase, up from $35,000.
• Qualifying Income Threshold: Earn up to $150,000 and still get in on the First-Time Home Buyer Incentive—perfect for those not making Bay Street lawyer salaries yet.

Housing Affordability Measures in the 2024 Federal Budget

$4 Billion on Deck: This heap of cash is earmarked over five years to push more affordable housing units into the market—because we all know Toronto could use more homes that don’t cost more than a small European castle.

Cooling Off the Flippers: Sold a house within 12 months? Now, it’s taxed as business income. Sorry, serial flippers, it’s time to cool those jets! This is kind of insane to me. I get trying to curb speculative investing, but when I buy a property, spend three months planning improvements, and then spend hundreds of thousands of dollars executing the build, should I be considered a “flipper”? I’m not too fond of this.

Other Notable Nuggets in the 2024 Canadian Federal Budget

Enhanced Tax Credits for Going Green: Retrofit your home with energy-efficient upgrades and watch the tax credits roll in.

Support for Rental Construction: More funds are needed for those looking to build rental properties because not everyone can afford to buy real estate here in Toronto.

Looking Ahead: The Broader Economic Impact of the Federal Budget 2024

The conclusion I draw from these measures is nuanced and affects many Canadians in different ways. These aren’t new taxes but rather increases on existing taxes. These adjustments aim to create a more balanced and equitable market. However, these changes could also inadvertently limit supply by discouraging rapid property turnover. This could lead to higher prices in major cities like Toronto as the market adjusts to these new realities.

So at the end of the day, as usual, this budget will provide an amazing resource of soundbites for political leaders on all sides and likely create a ton of confusion while striving for votes. Let the games begin, just remember to read beyond the headlines and focus on the facts.

Namaste, and have a great day

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