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Are you planning on Buying your first home in 2024? Here are 3 Tax Strategies to use

Many Canadians say they may buy a home in 2024. If you are planning on being a first time home buyer in 2024, here are the top three tax incentives/strategies you should consider.

1.) (FHSA) First home savings account– First launched in 2023, FHSA is a registered savings plan that allows you to save $8,000 per year, up to a total of $40,000 lifetime limit on a tax free basis to put towards the purchase of your first home in Canada. The FHSA is a best feature combination of an RRSP being a tax deductible contribution, and the best feature of a TFSA, where you can benefit from tax free withdrawal of all contributions, including income and growth in the account. FHSA is available to residents of Canada and must be 18 years of age. Here is a link to information on the FHSA https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html

2.) (HBP) Home Buyers’ Plan– The federal HBP allows a first time home buyer to withdraw $35,000 from their RRSP to put towards the purchase, or construction of a new home without tax penalties. The key piece to the HBP is the amount withdrawn from your RRSP, must be repaid over a maximum of 15 years, starting in the next calendar year. There are some definitive rules around the HBP, especially the repayment of the funds, here is a link to more information https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan.html

If you are liking both the above strategies, wait, it gets better! How about using both strategies, FHSA and the HBP towards buying your first home! This means you can contribute the $40,000 to your FHSA and participate in the HBP by withdrawing $35,000 from your RRSP, you have access to $75,000 of tax free savings, plus any growth or income on the FHSA contributions. More exciting is both you and your spouse/partner can participate in both plans, for a potential $150,000 of tax free funds(plus income/growth) towards buying your first house. This is very exciting for young Canadians, a real incentive to start saving, especially taking advantage of the FHSA.

3.) (HBA) Home Buyers’ Amount– Better than nothing, when you file your personal income tax return for the calendar year in which you bought your first home, you can claim the HBA, a non-refundable tax credit of $1,500. Here is a link to more information https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-31270-home-buyers-amount.html

Start saving now, the FHSA can be a real game changer for young Canadians.

Multiplex housing coming to Vancouver Single Family Neighborhoods

Vancouver City Councilors have approved to amend zoning and development bylaws, to allow 6 units or 8 units if they are rentals on a single family lot. These sweeping changes will allow multi-unit dwellings in Vancouver neighborhoods where previously only single family homes have been allowed.

This change is aimed to encourage increasing density in areas where there is a lack of affordable and appropriate housing while maintaining the character of Vancouver neighborhoods.

Click here for the full article;

https://www.cbc.ca/news/canada/british-columbia/multiplex-housing-vancouver-1.6967977

If you are interested in how these zoning changes could potentially affect you or the value of your home, please feel free to contact me at anytime.

New housing legislation to look out for in 2024

British Columbia 

New Short-term Rental Housing By-laws

In late 2023, the provincial government introduced the Short-Term Rental Accommodations Act which imposes stricter regulations and enforcement on short-term rental housing. As of May 1st, 2024, the Act will require short-term rental hosts to display a valid business licence number on their listing in regions where a licence is required by the local government. Short-term rentals will be limited to the host’s principal residence, plus one secondary suite or accessory dwelling unit, in select communities. 

Additionally, protections for ‘non-conforming use of property’ will no longer apply to short-term rentals. Later in the year, the British Columbia government will implement a short-term rental registry, and require rental platforms to share data with the Province. 

Expanded Speculation and Vacancy Tax

The province has expanded its existing speculation and vacancy tax laws to 13 new communities, including Penticton, Courtenay and Kamloops. Homeowners in applicable regions will be required to declare how they used their property in 2024 for the first time in January, 2025. 

Introduced in 2018, the speculation and vacancy tax is 2% for individuals who don’t pay the majority of their taxes in Canada, or 0.5% for Canadian citizens or permanent residents who pay the majority of their taxes in the country. 

Updated Zoning Rules

New zoning laws are under consideration to deliver more small-scale, multi-unit housing across British Columbia. Under the proposed legislation, one secondary suite or one laneway home will be permitted in all communities throughout the province. In most areas within municipalities of more than 5,000 people, by-laws will also be adapted to allow three to four units on lots currently zoned exclusively for single-family or duplex residential, and permit six units on larger lots close to transit stops with frequent service.

Additionally, the new zoning rules would require municipalities to update community plans and zoning by-laws on a regular basis to ensure that there is enough housing for current and future residents. Changes to zoning by-laws will roll out across 2024.