Recently, the federal government unveiled its 2024 budget, placing a significant focus on addressing housing challenges in Canada. The Liberal government's strategy revolves around three main pillars: constructing new housing units, facilitating home ownership and rental processes, and improving affordability for Canadians.

Here's a breakdown of the budget's implications for both first-time home buyers and existing homeowners:

Changes to the Capital Gains Tax: Under the updated regulations, individuals selling investment properties will experience notable adjustments:

• Previous Rule: 50% of capital gains from personal investment properties were taxable. Example: Selling a property for $1,850,000 that was purchased for $1,400,000 results in a taxable gain of $225,000 (50% of $450,000 profit).
• New Rule (Effective June 25, 2024): The taxable gain will be 66.67% on the amount of capital gain exceeding $250,000. Example: The first $250,000 of gain is taxed at 50% ($125,000), and the remaining $200,000 of gain is taxed at 66.67% ($133,400), totalling $258,400.
• Impact: Sellers may face an additional tax burden, with an example scenario highlighting an extra $33,400 in taxes compared to the current rule.

RRSP Changes for First-Time Home Buyers: As part of the Home Buyers' Plan, the maximum withdrawal amount from Registered Retirement Savings Plans (RRSPs) for first-time home purchases has increased from $35,000 to $60,000, effective April 16. Additionally, individuals withdrawing funds between January 1, 2022, and December 31, 2025, now have five years instead of two to initiate repayments.

Amortization Schedule Extension: Starting August 1, mortgage insurance regulations for new builds will permit 30-year mortgage amortizations for first-time buyers, extending beyond the current limit of 25 years with a 20% down payment.

Mortgage Renewal Updates: Banks are expected to provide earlier notice of mortgage renewal dates and options, with a new guideline requiring contact up to 24 months in advance. However, it's important to note that adherence to this guideline is not legally mandated.

Canada Green Buildings Strategy: This initiative aims to reduce energy consumption and emissions through energy-efficient retrofits for homeowners and renters, as well as promoting the construction of more sustainable buildings. Specific details of the program are yet to be unveiled.

Low-Cost Financing for Additional Suites: To address housing shortages, the 2024 budget proposes the Canada Secondary Suite Loan Program, enabling homeowners to access up to $40,000 in low-interest loans to add secondary suites to their properties.

These measures collectively represent the government's efforts to tackle housing challenges and support both aspiring homeowners and existing property owners in navigating the evolving real estate landscape.