In the latest federal budget, housing measures have been outlined, drawing both appreciation and concern, particularly regarding the plight of first-time homebuyers, as highlighted by the Residential Construction Council of Ontario (RESCON).While acknowledging positive steps in assisting purpose-built rental housing, President Richard Lyall noted the lack of relief for first-time buyers, burdened by exorbitant taxes on new housing. With housing costs soaring to unprecedented levels—now ten times the average household income—many aspiring homeowners find themselves priced out of the market.A study by the Canadian Centre for Economic Analysis reveals that 31% of the cost of purchasing a new home comprises taxes, fees, and levies, exacerbating the affordability crisis.&nbsp;Alarmingly, 76% of prospective buyers cannot afford newly constructed homes, leading to a decline in housing starts and an increase in prices, pushing many young Canadians to seek housing options outside urban centers.Despite some positive changes in the budget, such as increasing the capital cost allowance rate for apartments from four to 10 per cent, and commitments regarding activating crown land for housing, there continues to be a startling lack of support for the first-time homebuyer (and, frankly, all kinds of residential buyers).The federal budget proposed to encourage more heavy borrowing by the first-time buyers, including increasing the RRSP withdrawal limit to $60,000 and extending mortgage amortization to 30 years for newly constructed homes. Currently, Canadians can withdraw up to $35,000 from their Retirement Savings Plan (RRSP) tax-free for their first home purchase, but the federal budget proposes increasing that limit to $60,000. The maximum amortization period for first-time buyers purchasing newly built homes is also extending to 30 years from 25 years, a change that would lower monthly payments.While these measures are welcomed by many industry experts, concerns persist about their short-term impact on affordability as well predictable long term implications.&nbsp;There are already severe shortages in all types of properties across Canada. The proposed measures will increase perceived buying power via taking on more debt, thus increasing competition.The budget outlines measures that stimulate housing demand, including increasing the RRSP withdrawal limit and extending mortgage amortization periods. However, critics argue that these debt-focused solutions will exacerbate financial vulnerability among Canadians without effectively tackling the root causes of housing unaffordability.Moreover, concerns have been raised about the government's immigration programs, which create rapid population growth. Such programs lead to higher unemployment rates and wage suppression, further exacerbating the challenges faced by first-time homebuyers.By doubling down on immigration initiatives without adequately addressing housing affordability and supply constraints, the government risks perpetuating the cycle of financial strain for Canadians. Without comprehensive measures to enhance purchasing power and address underlying economic disparities, the proposed solutions falls short of achieving long-term sustainability.Many stakeholders emphasize the importance of adopting a holistic approach that considers the interconnected nature of these issues. Only through concerted efforts to address underlying economic factors can the government hope to create a housing market that is accessible and sustainable for all Canadians, while ensuring the nation's long-term prosperity and security.By facilitating greater debt accumulation without addressing the root causes of housing unaffordability, the government risks leaving Canadians financially vulnerable, with limited prospects for building a secure retirement. Many economic experts would recommend tax burden be reduced on many levels, to free up disposable income.&nbsp;The 2024 budget introduces significant changes to the taxation of capital gains, particularly affecting high-income Canadians and investors.&nbsp;In this example written by the government, this Ontario resident has a $400,000 salary with capital gains of $300,000. This is how tax changes will affect capital gains.&nbsp;<figure class="image"><img src="https://files.rifo.co/CompanySite/124/124_02.png"></figure>&nbsp;Here's what you need to know about these proposed amendments:Under the current tax rules, only half (50 per cent) of the capital gain from the disposition of capital property is included in taxable income. However, the budget proposes to increase this inclusion rate to two-thirds (66.7 per cent) for capital gains realized on or after June 25, 2024.For individuals, the new rules mean that the first $250,000 of annual capital gains will still benefit from the 50 per cent inclusion rate, regardless of when they're realized. However, any gains above $250,000 after June 25, 2024, will be subject to the higher inclusion rate.This change has significant implications for investors, particularly those in the top marginal tax bracket. For example, an Ontario investor currently facing a top marginal tax rate of 53.53 per cent would see their top capital gains marginal tax rate increase from 26.76 per cent to 35.69 per cent for gains above $250,000 realized after June 25.Home owners planning to sell a secondary vacation home or rental property will also be affected. It’s conceivable that the gain on that property could be far more than $250,000, meaning that if the property is sold any time after June 25, 2024, any gain in excess of $250,000 would now be taxed at the higher rate.Corporations and trusts will also be affected, as they won't benefit from the lower inclusion rate on the first $250,000 of annual gains. Instead, all corporate gains will be taxable at the new 66.7 per cent inclusion rate from June 25 onwards.Furthermore, the increased inclusion rate may have significant implications for estates. Upon death, there's a deemed disposition of all capital property at fair market value, meaning estates could face higher taxes on accrued gains above $250,000 at the new inclusion rate.Overall, these proposed changes aim to address perceived inequities in the taxation of capital gains among Canadians. However, they may have wide-ranging effects on investors, business owners, and estate planning strategies, requiring careful consideration and potentially necessitating adjustments to financial plans and investment strategies.For people seeking affordable housing, and especially those looking to buy their first home, the picture does not look too bright.&nbsp;According to TD, Canadian housing starts came in at 242.2k annualized units in March, representing a 7% month-on-month decline from February's level. The six-month moving average of starts was 244.0k units in March, down 1.6% m/m from February.&nbsp;Urban starts were down in 5 of 10 provinces, with the largest declines were in Ontario (-14.9k to 69.8k units) and Alberta (-9.0k to 38.6k units), although starts were also down across most of the Atlantic in March.Housing starts are expected to decline in 2024 and prices are expected to rise. This will make it even more difficult for first-time buyers.&nbsp;Despite attempts to address various aspects of the housing crisis, the 2024 federal budget falls short in providing comprehensive support for first-time homebuyers, leaving many Canadians grappling with the daunting prospect of homeownership in an increasingly unaffordable market.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Insufficient Support for First-Time Homebuyers in 2024 Budget

Overview of the 2024 federal budget reveals lack of adequate support for first-time homebuyers, raises concerns about affordability and debt accumulation.

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