I wanted to take a moment to share some important updates from the 2024 federal budget that could impact your financial planning, especially concerning capital gains. Here’s a brief overview of the key changes and their potential implications.

Key Federal Budget Capital Gains Measures

Increase in Capital Gains Inclusion Rate
Change: Effective June 25, 2024, the capital gains inclusion rate rose from 50% to 66.67% for trusts and corporations. For individuals, the rate also increased to 66.67% but only on annual capital gains exceeding $250,000. Gains below this threshold will continue to be taxed at the 50% inclusion rate.
Impact: This means a larger portion of your capital gains will be subject to income tax, potentially increasing your tax burden on real estate investments, property sales, and gains realized within corporations. Additionally, gains on Canadian residential property held for less than a year may be considered business income, thus being fully taxable under the residential property flipping rule unless an exception applies.

Increase to Lifetime Capital Gains Exemption (LCGE) for Entrepreneurs
Change: The LCGE increased to $1.25 million (up from $1.016 million) for eligible capital gains, effective June 25, 2024.
Impact: If you're selling shares of a qualified small business corporation (QSBC) or qualified farm and fishing property (QFFP), this increase in the exemption amount can significantly benefit you by reducing your taxable income.

Alternative Minimum Tax (AMT) Adjustments
Change: Adjustments to AMT rules to align with changes in regular income tax calculations. The AMT is a parallel tax calculation that allows fewer tax credits, deductions, and exemptions than ordinary personal income tax rules. Taxpayers pay the higher of the regular tax or AMT.
Impact: AMT considerations become crucial in planning for capital gains realization and charitable contributions, influencing your tax planning strategies.

Canadian Entrepreneurs’ Incentive
Introduction: Starting in 2025, a new initiative will reduce the capital gains tax rate to one-third on up to $2 million of qualifying shares. This incentive provides for a capital gains inclusion rate that is half the prevailing rate on up to $2 million in capital gains per individual over their lifetime.
Impact: While this incentive does not apply to professional corporations, it aims to promote entrepreneurship by lowering the tax burden on qualifying share sales.

Strategic Planning Considerations
Consultation: Engage with a tax advisor to navigate these changes effectively and tailor strategies to your specific financial situation.
Long-term Planning: Assess the implications for retirement planning, estate management, and future investment decisions in light of these regulatory adjustments.

As these tax policies evolve, proactive planning is crucial. This overview is just a high-level summary provided by the Toronto Regional Real Estate Board (TRREB), and I strongly encourage you to seek expert professional advice to safeguard your financial interests.

In the meantime, for more information, please visit the Government of Canada’s website.
https://www.canada.ca/en/department-finance/news/2024/06/capital-gains-inclusion-rate.html#

Disclaimer: This information is based on proposed legislation and is subject to revision. It does not constitute accounting, legal, or tax advice. For personalized advice, please consult with a qualified professional.

In April 2024, the Toronto real estate market saw a decrease in home sales by 5% percent compared to April 2023. Despite this drop, new listings surged by 47.2 percent year-over-year, providing more options for buyers but not significantly impacting the average selling price, which saw a marginal increase of 0.3 percent. The Toronto Regional Real Estate Board officials noted that while current listings are notably higher, potential buyers might be delaying purchases in anticipation of forthcoming rate cuts by the Bank of Canada. Looking ahead, TRREB anticipates that declining borrowing costs will lead to tighter market conditions and renewed price growth as we move towards 2025.
 
Read the full GTA report here: 
https://trreb.ca/wp-content/files/market-stats/market-watch/mw2404.pdf
 
The Hamilton-Burlington region saw a 7% decrease in housing sales compared to April 2023, marking a departure from long-term trends for this month. Despite this, year-to-date sales remained on par with the previous year. The REALTORS® Association of Hamilton-Burlington (RAHB) noted that while apartment home sales declined, there was an increase in semi-detached and row-style home sales. New listings increased, raising inventory levels across all property types and price ranges—a notable change given the typically low inventory levels of the past decade. The months of supply also increased, reflecting more balanced market conditions compared to the tight supply last year. 
 
Read the full Hamilton-Burlington report here: 
https://s1.cdn.rahb.ca/rahbca/wp-content/uploads/2024/05/April-All_Regions.pdf
 
Even if you're not actively looking to buy or sell, understanding the market can help you spot opportunities. This might include buying a second home, investing in rental properties, or downsizing at an opportune time to maximize your financial gain. 
 
Whether you're planning your next big move or just curious about your home's current value, staying informed about the real estate market is crucial. As your dedicated real estate expert, I'm here to provide you with up-to-date market insights and personalized advice tailored to your unique situation.
 
Take the first step – give me a call!