The 2024 federal budget focuses on helping younger voters, particularly Millennials and Gen Z, navigate rising housing costs and inflationary pressures. However, the budget takes aim at wealthier Canadians with new tax measures, including an increase in the capital gains inclusion rate from 50% to 66.6% for gains over $250,000. This change will impact individuals selling stock or properties that are not their primary residence, as well as businesses for all capital gains.
The budget also projects a deficit of $39.8 billion in FY24/25 and includes new spending measures, such as a $480 billion government spending plan for the next fiscal year, which includes $54 billion in debt payments. Critics argue that the budget’s spending outpaces the savings found in a strategic spending review, making it challenging to achieve fiscal credibility.
On the housing front, the budget introduces various measures, including allowing 30-year mortgage amortizations for first-time homebuyers of new builds and increasing the RRSP Home Buyers’ Plan limit from $35,000 to $60,000. Additionally, the budget aims to create a renters’ bill of rights and tenant protection fund while incentivizing the construction of new purpose-built rental units.
Overall, the budget’s focus on taxation and spending may have limited impact on housing affordability and the broader economy. Concerns remain regarding low productivity growth, insufficient business capital spending, and the challenges of investing in residential rental real estate.
Published by Dr. Sherry Cooper