Sunday Dock Read – Capital Gains, Budget, Reader’s Questions

New Capital Gains Changes Announced In The Canadian 2024

What Are Capital Gains?

When you sell an asset or investment for more than you paid for it, that difference is your capital gain. For example, say you bought a cottage for $400,000 and two years later, sold it for $500,000. You have a capital gain of $100,000. On the flip side, when you sell an asset for less than you bought it for, you have a capital loss.

You can realize capital gains and losses on several types of investments and property, including stocks, bonds, shares in mutual funds, rental properties, cottages, even business equipment. Capital gains and losses do not apply to your primary residence.

What Is Capital Gains Tax?

In Canada, capital gains are taxable. How much tax you pay depends on a few factors. That’s because the value of a capital gain is treated as income during the year in which you realized it – in other words, in the year you sold your investment or property. But it’s not the full value of the gain that gets taxed – rather it’s only a portion.

The capital gains tax inclusion rate – today and tomorrow.

Today, only 50% of the capital gain is taxable (this is known as the capital gains tax inclusion rate). This means that $50,000 of the $100,000 earned from the sale of the cottage in our example is added as income for that tax year.

Before New Changes:
  • Your regular income, earned from your full-time job is $75,000
  • You make a $100,000 profit from the sale of your cottage (after Real Estate fees, closing costs, etc.)
  • 50% of the profit is taxable, meaning you add $50,000 to your income during the tax year in which you realized this capital gain
  • $75,000 + $50,000 = a total income for that tax year of $125,000
  • The amount of tax you ultimately pay in that year will depend on your tax bracket and its marginal tax rate
After New Changes:

If this most recent budget is passed, the capital gains tax inclusion rate is set to change. The federal government’s 2024 budget proposes a few modifications to how capital gains are taxed. Here’s a rundown of the changes:

  • All corporations and trusts, the capital gains tax inclusion rate will increase to 66.67% – from 50%
  • Individuals with gains over $250,000, the capital gains tax inclusion rate will increase to 66.67% – from 50%
  • Individuals with gains under $250,000, the capital gains tax inclusion rate will stay the same, 50%
Who Will The Changes Affect?

The adjustments will affect all corporations and trusts regardless of value, as well as individuals with capital gains of $250,000 or more.

Capital gains tax does not apply to your primary residence, so these changes could affect you if:

  • Sell a secondary property (cottage/rental/investment property) and earn more than $250,000 in profit from that sale
  • Sell investments for a value of $250,000 more than the original purchase price
When Will The Changes Take Effect?

If adopted, the changes will take effect on June 25, 2024.

The federal government estimates that a vast majority of Canadians, around 28.5 million, will not have any capital gains income next year, with an additional three million falling below the $250,000 annual threshold. This suggests that proposed changes to capital gains taxes will not affect most Canadians. However, if you anticipate being affected, it’s advisable to consult with a qualified tax advisor and financial planner to explore strategies for mitigating the impact.

More Federal Budget Announcements Aimed At Canada’s Housing Market

Property Conversion: The government plans to invest $1.1 billion over ten years to convert 50 percent of federal office spaces into housing. Additionally, it intends to repurpose Canada Post land and evaluate redevelopment opportunities on national defence lands for residential use.

Apartment Construction Financing: An additional $15 billion is proposed for the Apartment Construction Loan program to facilitate the construction of approximately 131,000 new rental units across different regions over the next eight years.

Extension of Mortgage Amortization Period: There’s consideration for extending the maximum mortgage amortization period to 30 years, potentially benefiting first-time homebuyers purchasing newly constructed homes.

Support for Secondary Suite Development: The Canada Secondary Suite Program offers up to $40,000 in low-interest loans to homeowners for creating secondary suites within their residences.

Utilization of Underutilized Public Lands: Underused public lands will be leased to developers at reduced rates to encourage the construction of affordable housing, including sites like schools with low enrollment and abandoned industrial parks.

Enhancement of Home Buyers’ Plan RRSP Withdrawal Limit: The withdrawal limit under the Home Buyers’ Plan is increased to $60,000 for individuals and $120,000 for couples, facilitating down payments for qualifying homes.

Exploration of Halal Mortgages: Consideration is given to expanding access to alternative financing products, including Halal mortgages, which align with Islamic principles by avoiding interest-based transactions.

Addressing Labour Shortage: Measures include allocating $50 million to expedite the Foreign Credential Recognition program and $100 million for skilled trades training and recruitment initiatives to alleviate the labor shortage in the housing market.

Now, As Mentioned In Our Social Media:

4 Mortgage Questions From Our Audience

1. How Does Help Me Save Money On Interest?

(Asked by Dr. Patel from Brantford)

  1. Access to Multiple Lenders: They can compare mortgage products from various lenders to find the best rates and terms.
  2. Negotiation Skills: Skilled negotiators, they can secure lower interest rates and favorable terms on your behalf.
  3. Specialized Knowledge: They are well-versed in the mortgage market, providing tailored advice to suit your needs.
  4. Access to Special Offers: They have access to promotions and incentives from lenders, helping you save money.
  5. Customized Mortgage Solutions: They tailor mortgage options to your financial situation and preferences.
  6. Continuous Support: Offering ongoing assistance, they guide you through the mortgage process effectively.
  7. Refinancing Advice: They help explore refinancing options to lower rates or consolidate debt.
2. What Are The Costs Included In A Mortgage Process?

(Asked by Stephen in Milton)

  1. Interest: The cost of borrowing money from the lender, calculated as a percentage of the principal loan amount.
  2. Principal: The amount of money borrowed from the lender to purchase the property, excluding interest and other fees.
  3. Down Payment: The initial payment made by the buyer toward the purchase price of the property, with the minimum required depending on the property’s purchase price and insurance.
  4. Mortgage Insurance Premiums: If the down payment is less than 20% of the purchase price, buyers may need to pay premiums to protect the lender in case of default.
  5. Origination Fees: Charges by lenders for processing the mortgage application, which can vary depending on the lender and mortgage type.
  6. Appraisal Fees: The cost of assessing the property’s market value, typically paid by the borrower.
  7. Legal Fees and Disbursements: Expenses for legal aspects of the transaction, including title searches and document preparation.
  8. Home Inspection Fees: Optional but recommended costs for assessing the property’s condition before purchase.
  9. Property Tax: Taxes on the property, often included in monthly mortgage payments.
  10. Homeowners Insurance: Required to protect the property against damage or loss, with costs varying based on location and property value.
  11. Understanding and budgeting: Crucial factors for a successful home purchase in Canada.
3. Hey, Matt! I’m Self-Employed In The Construction Industry; The Big Banks Aren’t Helpful. Could You Help Me Understand The Process With

(Asked Matthew C. in Lindsay)

Securing mortgages for self-employed individuals presents unique challenges, despite constituting nearly 20% of Canada’s income earners. The primary hurdle stems from the difficulty in verifying income, compounded by the tendency of business owners to maximize deductions for tax purposes, which lenders may overlook. can assist with self-employed financing!

To qualify for a self-employed mortgage, lenders typically mandate the inclusion of personal tax Notices of Assessment (NOAs) from the past 2-3 years with the application. Those furnishing this proof of income can access mortgage products and rates akin to traditional borrowers. Alternatively, applicants lacking NOAs must exhibit a strong credit history and provide a minimum 10% down payment.

Additional documentation that lenders typically request includes:

  • Financial statements demonstrating at least 2 years of business operation
  • Evidence of paid HST/GST
  • Contracts detailing projected revenue
  • Personal and business credit scores
  • Confirmation of principal ownership in the business
  • Documentation of business licensing
  • Proof of non-gifted down payment

For self-employed individuals verifying income through NOAs, mortgage default insurance operates identically to traditional mortgages. Premiums apply for down payments between 5% and 19.99%, waived at 20% or higher, and amortized over the loan term.

For those unable to substantiate income adequately, a minimum 10% down payment is required, with only Genworth Canada or Canada Guaranty offering mortgage default insurance, albeit at higher rates.

Given the complexity of identifying lenders specializing in self-employed mortgages, employing proves advantageous. Mathew at possesses access to hundreds of lenders and comprehensive market knowledge, facilitating connections with lenders tailored to individual circumstances.

Matthew raises an important query, prompting a discussion on commonly encountered questions among builders. Here are some quick answers to address them:

For builders embarking on their journey with limited access to credit, leveraging the equity in their homes proves to be a strategic starting point. Extracting this equity and allocating the funds towards completing initial projects can yield significant advantages.

It’s essential to note that if you’re self-employed and your spouse isn’t, both incomes are considered, enhancing your financial profile and prospects for obtaining credit.

Contractors engaged in speculative building often face challenges securing financing at the outset. Utilizing personal equity to finance projects can be daunting initially. However, securing a presale early in the building process can mitigate these challenges. Lenders are more inclined to extend credit against the project when an exit strategy is evident.

Regarding closing costs:

  1. Expectation: Closing costs include various fees and expenses incurred when finalizing a property purchase.
  2. Breakdown: These costs vary by location and property type, including land transfer tax, legal fees, and appraisal fees.
From Application To Funding; Can You Describe The Full Process?

(Asked by Joe D. in Guelph)

  1. Preparation: Before applying for a mortgage, it’s essential assess your financial situation, including your income, expenses, credit history, and debt obligations. Determine how much you can afford to borrow and what type of mortgage best suits your needs.
  2. Research and Comparison: research various lenders, including banks, credit unions, mortgage brokers, and online lenders, to compare mortgage products, interest rates, terms, and conditions. Depending on your situation will consider factors such as fixed vs. variable rates, amortization periods, and prepayment options.
  3. Pre-Approval: Many borrowers choose to obtain a mortgage pre-approval before house hunting. During the pre-approval process, the lender assesses your financial information and creditworthiness to determine the maximum amount you can borrow and the interest rate you qualify for. Pre-approval provides you with a better idea of your budget and strengthens your offer when making an offer on a home. (The same process for Commercial and Development)
  4. House Hunting and Offer: Once you’ve been pre-approved for a mortgage, you can start house hunting within your budget. When you find a property you’re interested in, you’ll make an offer to purchase, which includes the proposed purchase price, any conditions, and the closing date.
  5. Formal Mortgage Application: After your offer is accepted, will submit a formal mortgage application to your chosen lender through The lender will require detailed financial information, including proof of income, employment history, assets, debts, and identification documents.
  6. Property Appraisal and Inspection: The lender may require an appraisal of the property to determine its market value and ensure it meets lending standards. While not typically required by lenders, many buyers choose to hire a home inspector to assess the property’s condition and identify any potential issues.
  7. Underwriting and Approval: Once the lender has received all required documentation, they’ll review your application with, assess your creditworthiness, and determine whether to approve your mortgage. This process may take several days to a few weeks, depending on the lender and the complexity of the application.
  8. Mortgage Offer: If your mortgage application is approved, the lender will provide with a mortgage offer outlining the terms and conditions of the loan, including the interest rate, repayment schedule, and any applicable fees.
  9. Closing: Once you’ve accepted the mortgage offer, the lender will work with and your lawyer or to finalize the mortgage documents and complete the closing process. On the closing date, you’ll sign the necessary paperwork, pay any remaining closing costs, and take possession of the property.
  10. Mortgage Payments: After closing, you’ll start making regular mortgage payments according to the terms of your loan agreement. Be sure to budget for mortgage payments, property taxes, homeowners insurance, and other ongoing housing expenses.
  11. Throughout the mortgage application process, it’s essential to communicate openly with, provide accurate information, and address any concerns or questions promptly to ensure a smooth and successful transaction.

Thanks For Reading!
Next weekend is my favorite time of the year – Cottage Opening Weekend!

Have Questions?

Contact us today to schedule your personalized consultation and take the first step towards turning your homeownership dreams into reality or look into better investing opportunities by phone at 519.497.3667 or by email at

Mathew Monks, Mortgage Agent Level 2
Licence #M18002043

Mortgage Intelligence FSRA
Licence #10428