Great News: 2024 Federal Budget Relating To First Time Home Buyers

The April 2024 Federal Budget has a couple of positive notes to help First Time Home Buyers get into the ever more expensive Canadian Real Estate Market.

First Time Home Buyers purchasing new construction can now amortize their mortgage for up to 30 years (up from 25). This is only for those who are are putting down less than a 20% down payment .

For a $300,000 mortgage at current interest rates, the longer amortization would reduce a purchaser's monthly payment by about $143.00.  More importantly the slightly lower payment would allow the applicant to qualify for a slightly larger mortgage (aby about $25,000).

The second budget item favouring First Time Home Buyers allows the purchaser to take up to $60,000 out of their RRSP to use to purchase a home. This has been increased from the previous $35,000 limit. For a couple, should they each have the money in their RRSPs they could take up to $120,000 out of their RRSPs to go towards the purchase. A nice bonus to this provision is that it lengthens the period where the repayments start to five years allowing the borrower to hopefully be earning more money by the time the repayment starts.

However governments are clever and new benefits like these are rarely free. People who sell a 2nd home or investment property will see their Capital Gains tax increase. With the new tax rules, the capital gains inclusion rate has increased to 66.7% from 50%. This means you now have to include 66.7% of your profit as taxable income for any gains above $250,000.