3 Ways Canada’s 2024 Budget Impacts Homebuyers and Sellers

Wahi helps you understand headline-grabbing items from the Canadian budget that have implications for Canadians planning to buy or sell property in the coming months and years.

By Josh Sherman | 3 minute read

The 2024 Canadian budget arrived on April 16 with a few surprises, although some of the most-talked-about measures aren’t expected to affect a majority homebuyers or sellers.

Recently, Canada’s 2024 budget was tabled by the federal government at the House of Commons, in Ottawa.

The proposed budget, which is not yet adopted, addresses everything from healthcare and cost-of-living concerns to tech innovation and the environment. Given Canada’s ongoing housing-affordability crisis, many eyes were on what real estate-related moves the federal government would make. Below, we’ve highlighted three measures from the 2024 budget that could have impacts on Canadian homebuyers and sellers.

1. Capital Gains Tax Changes

This is perhaps the most controversial housing-related item in the Trudeau government’s budget. Currently, Canadians pay tax on 50% of the profits, or capital gains, they make on the sale of an asset, such as stocks or a secondary property like a rental apartment. Budget 2024 suggests making 66.6% of capital gains taxable above $250,000 (gains below this are subject to the existing 50% inclusion rate).  

However, Jamie Golombek, managing director of tax and estate planning at CIBC Private Wealth Management, is quick to point out that most Canadians won’t be affected by this change. That’s because Canada is maintaining the principal residence exemption on capital gains, meaning when Canadians sell the home they live in most of the year, the profits aren’t taxable. “It won’t affect the average home owners — it’s that simple,” Golombek tells Wahi. In fact, the federal government estimates 28.5 million Canadians won’t pay any capital gains tax at all next year — and only 40,000 will see gains above the new $250,000 threshold.

The change will affect real estate speculators and investors, Golombek adds. “That will be a substantial hit, and may discourage some investors depending on the size of the amount from entering into the investment market for real estate,” he says. “The biggest impact it might have on a quote-unquote ‘average Canadian’ is of course the sale of a cottage property, or a vacation property.”

2. Extended Mortgage Amortizations for Some First-Time Buyers 

If you’re a first-time homebuyer in the market for a newly built home, another proposal in the federal budget could help lower your monthly mortgage payments by spreading them out over a longer period of time.

Previously, only uninsured mortgage borrowers (those who are able to put down a downpayment of at least 20%) could access 30-year amortizations, as insured mortgage borrowers had amortization periods capped at 25 years. But with this change, a first-time homebuyer shopping for a new build can qualify for the longer repayment timeline even with a downpayment of less than 20%. The regulatory change would be effective Aug. 1.

Undoubtedly, some homebuyers entering the market could benefit from this change. But experts note it only affects a small share of the overall market since it doesn’t apply to existing homes, only those units being sold new by developers. “To me this is so inconsequential in terms of the broader market and the challenges first-time homebuyers are facing,” Elan Weintraub, co-founder and mortgage broker at Mortgageoutlet.ca, tells Wahi of the rule change.

3. The Home Buyers’ Plan is getting more generous  

Canada’s popular Home Buyers’ Plan lets first-time buyers temporarily withdraw up to $35,000 from an RRSP for the purchase of their first home. First-time buyers currently have a 15-year grace period to recontribute the amount withdrawn back into their Registered Retirement Savings Plan. The Canadian budget proposes nearly doubling the withdrawable amount to $60,000 and adding three more years to the payback period.

“I think it’s very helpful for someone buying their first home because they need all the help they can get to get the biggest downpayment possible,” says Golombek. “It’s certainly a welcome move,” he adds, noting it will be especially helpful in Canada’s most expensive cities. “It absolutely is going to help markets like Toronto and Vancouver, where you need to come up with more cash for your downpayment.”