Greg Ero's Newsletter Mar 2024

Gregory Ero - Mortgage Consultant

Dominion Lending Centres

mortgageprofessor@outlook.com
778-891-4734
http://www.mortgageprofessor.ca/

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Your 2024 Tax Claims Kick Off

Most Canadians must file their tax return by April 30, which is also the deadline to make a payment for those who owe money to the government.Canadians who are self-employed, along with their spouses or common-law partners, have until June 15. Since that day falls on a weekend, the CRA will consider a return to be on time if it is received by or postmarked on or before June 17.

Self-employed Canadians must still pay money owed to the CRA by the April 30 deadline to avoid paying interest.

FHSA, home office claims among changes

This marks the first year that taxpayers will be able to enter deductions on the First Home Savings Account (FHSA), a type of tax-free account rolled out by the federal government last year to help Canadians save on their first home.

"Your contributions to the FHSA are tax-deductible, while your withdrawals — as long as you use them for the down payment of a purchase of your first home — are tax-free," said Gerry Vittoratos, a national tax specialist with UFile.ca.

The program allows prospective homebuyers to start saving for up to 15 years once they open an account, with an annual $8,000 deposit cap and a lifetime contribution limit of $40,000.

Canadians who've opened this type of account will receive a new slip called the T4FHSA, which will provide the details needed to complete your tax return.

Financial institutions and employers have until the end of February to send tax slips to the CRA. So most taxpayers might not even get their slips until early March, "and that's really the kick-off of the season," Vittoratos said.

Canadians might also notice that the temporary flat-rate method for claiming employees' home office expenses — such as rent, electricity, internet and office supplies — is no longer available.

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Canadian credit card debt climbed 3X the rate of Mortgages

Canadian households are cooling on their borrowing but the type of debt may be an important sign. Statistics Canada (Stat Can) data shows household credit climbed at one of the slowest rates in decades in January. The slowdown was primarily caused by slower mortgage debt growth, with credit card debt rising 3x faster.

Canadian Household Borrowing Picks Up, But Still Unusually Slow

Canadian household debt is rising but more in line with inflation and population growth these days. The balance of outstanding household credit saw monthly seasonally adjusted growth of $8.8 billion (+0.3%) to $2.93 trillion in January. Unadjusted annual growth was 3.4% for the month, a slight acceleration. However, it was still the slowest 12-month change for January going back to at least 1990, but likely way further.

Canadian Mortgage Debt Rose At The Slowest Rate Since 2001

Mortgage debt represents the vast majority of the total outstanding balance. Households saw seasonally adjusted monthly growth of $1.1 billion (+0.1%) to $2.17 trillion in January. Unadjusted annual growth was just 3.4%, marking the lowest rate since April 2001.

Canadians Are Scrambling For More HELOC & Credit Card Debt

One surprising shift is borrowing of non-mortgage credit, which is suddenly in vogue. Seasonally adjusted monthly growth was $3.5 billion (+0.5%), pushing the balance to $750.3 billion in January. The unadjusted annual rate growth rate was 3.4% for the month.

According to the agency, home equity and credit card debt were significant contributors. They found home equity credit (+$0.9 billion; +0.5%) rose nearly as much as mortgages over the same period. Credit card debt (+$1.1 billion; +1.1%) was also huge—rising the same dollar volume as mortgage credit, advancing at 3x the rate to accomplish that move.

By itself, rising non-mortgage debt sounds like a bigger problem than it normally is. Annual growth is roughly at the same level it was around 2018, when mortgage debt wasn’t out of control. This is the type of credit that fuels consumption, tending to drive economic growth in productive areas.

However, this isn’t normal times so the impact is a little more mixed with context. Households are increasingly resorting to consumer debt to close the gap between inflation and a lack of wage growth. A problem that may not be totally apparent since homeowners are tapping the massive home equity windfall just delivered. It also provides more context to the RCMP’s concerns that younger households unlikely to ever own a home, may have a destabilizing effect for the country.

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Spring DIY Project: Front Lawn Replacement

I finally had enough of weeds that were killing the grass on our front lawn, and decided to call for help replacing the lawn. Unfortunately the landscapers around were already pre-booked months ahead as this was their busiest time of the year. Instead of waiting for the scorching summer sun to emerge, I decided to try doing the project myself. Afterall I used to be great at doing yard work in my younger days.

So I rented a Uhaul pickup truck, picked up a load of soil, ordered some rolls of grass, and rented a sod cutter. After offloading the soil and sod, I dug up the old grass with the sod cutter. Then I began removing the old grass and loading it into the truck. I had about 40% of the lawn removed (see upper photo) when I realized that this wasn't going as easy as I thought hehe.

Luckily I found some laborers on Facebook with some spare time on their hands. It took 3 of them a whole day to complete the rest of the project, and I was so glad to be back at my computer working on mortgage approvals. Per the lower photo, they did a decent job. Even though I saved a couple of thousand dollars on this one, I'm surely better planning ahead, and letting the experts handle stuff like this for me in the future.

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Spring Home Renovation Tips: Refresh And Renew Your Space

As the snow melts and the days grow longer, the arrival of spring brings with it a sense of renewal and rejuvenation. For many homeowners, it’s the perfect time to tackle home renovation projects that not only enhance the aesthetics of their living spaces but also improve functionality and efficiency. Here are some essential tips to help you refresh and renew your home this spring:

1. Plan Ahead: Before you dive into your renovation projects, take the time to plan. Decide on the areas of your home that need the most attention and prioritize projects based on your budget and the time you have available. Consider both aesthetic updates and practical improvements that can increase your home’s value.

2. Focus on Curb Appeal: Spring is the ideal season to enhance your home’s exterior. Simple updates like painting your front door, replacing old house numbers, or adding fresh landscaping can make a significant impact. Consider pressure washing your siding, driveway, and walkways to remove winter grime.

3. Refresh Your Paint: A fresh coat of paint can breathe new life into any room. Spring’s natural light can help you assess which areas of your home could benefit most from a repaint. Opt for light, airy colors to reflect the season and make your spaces feel larger and more inviting.

4. Update Your Lighting: As the days get longer, natural light changes the ambiance of your home. It’s a great time to reassess your lighting fixtures and consider upgrades or additions that enhance the brightness and mood of your rooms. Energy-efficient LED lights can also help reduce your electricity bills.

5. Optimize Your Outdoor Space: With warmer weather on the horizon, focusing on your outdoor living area is a wise move. Whether it’s repairing your deck, setting up a new patio area, or planting a garden, these renovations can extend your living space outdoors and provide a serene retreat.

6. Tackle the Clutter: Spring cleaning is a pivotal part of the season. Use this time to declutter and organize your home. Consider adding new storage solutions or reorganizing existing ones to maximize space and functionality.

7. Think Green: Incorporating energy-efficient updates can lead to long-term savings and contribute to a healthier planet. Consider double-pane windows, enhanced insulation, or eco-friendly materials for your renovation projects.

8. Hire Professionals When Needed: While DIY projects can be rewarding, some renovations require a professional touch. Hiring experts for electrical work, plumbing, or structural modifications ensures safety and adherence to local building codes.

Spring is a time of new beginnings, making it the perfect season to refresh and renew your home. By planning carefully and focusing on both aesthetics and functionality, you can create a more comfortable, efficient, and beautiful living environment. Remember, small changes can make a big difference, setting the stage for a year of enjoyment in your freshly updated home.

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Should You Own Residential Rental Properties in your Corporation or Personal Name

If you have an operating company:
98% of the time: Corporation

If you are an employee:
98% of the time: Personal Name

Corporations change the game dramatically with the use of small business tax rates. Small business tax rates in BC are at 11% with net income < $500k.

If your property is owned in the corporation, the operating company earnings can be used for:
1. Down payments
2. Negative cash flow
3. Mortgage pay down
4. Renovations

All of this is done without paying personal tax.

If you are an employee, you already pay the maximum tax, therefore there is no real reason to use corporations outside of legal protection.

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My address is: Gregory Ero Dominion Lending Centres 20434 64th Avenue, Langley, BC V2Y 1N4 Langley and Edmonton, V4N 0Y3 Canada	Powered By HippoContact