The same old liberals will form the next government, but with a new agenda of measures that affect your personal finances if you are a home buyer, parent, senior or high earner, especially owning bank stocks.
Affordability was an election topic for all parties and liberals were aggressive in promising solutions for people priced out of the housing market and for parents struggling to afford child care.
The most financially significant liberal measure for families is $10-a-day child care, targeted to be implemented in five years or less. Daycare costs are projected to drop 50 percent by the end of next year, which is important when you consider that families in some cities pay an average cost of $1,000 to $1,866 per month for child care. .
The issue of expensive daycare is made worse by the cost of mortgaging in today’s housing market. The Liberals promised a range of measures to help young buyers, each with the potential to cut marginally on the cost of buying a home or condo.
One of them is the new First Home Savings Account that will allow people under age 40 to pay up to $40,000 for a home down payment. With a registered retirement savings plan, you will get a tax deduction for contributing to the account. Like a tax-free savings account, you can withdraw the principal and growth in the account tax-free.
We’ll have to wait on the practical details on the new FHSA – what will the eligible investments be and which financial firm will offer them in a convenient, low-cost way?
Another liberal housing promise was to double the first-time home buyers tax credit from $5,000 to $10,000. This tax benefit provides $1,500 that can be used to help pay for the considerable closing costs involved in buying a home.
The Liberals also said they would cut premiums for mortgage default insurance offered by Canada Mortgage and Housing Corp. by 25 percent. The party’s election platform said the move would save the typical buyer $6,100. If you buy a home with a down payment of less than 20%, you need mortgage insurance.
Also, the Liberals said they would increase the maximum home cost where mortgage insurance is available from $1-million to $1.25-million and index that amount for inflation. This will help buyers in expensive markets like Toronto and Vancouver.
A niche solution to expensive homes is to encourage multi-generational housing – grandparents, parents and children living in the same household. The Liberals said they would introduce a new home renovation tax credit to help families add a secondary unit to their home for an immediate or extended family member. Families will be able to claim a 15-percent tax credit for up to $50,000 in reno costs, which means up to $7,500 in tax savings.
Another liberal housing promise is to create a Home Buyers Bill of Rights that would ban blind bidding, where bidders on a home are not able to find out about competing offers, and ensure a legal right to home inspections. Huh.
One last offering for homeowners is a 15 percent tax credit to help cover the cost of appliance repairs, up to a maximum of $500. The money is part of a plan to address the rising cost of equipment that doesn’t last long.
To help pay for its considerable spending, the party said it would raise corporate taxes on banks and insurance companies that earn more than $1 billion a year, and seek a temporary Canada Recovery Dividend paid by banks and insurers. Will start Investor banks are waiting to resume dividend growth after a moratorium imposed by regulators at the start of the pandemic. These taxes can affect the amount of these increases and put a weight on the price of bank shares.
Two generous personal tax measures stand out, the first of them being an anti-flipping tax on residential properties held for less than 12 months for reasons not related to personal reasons such as pregnancy, death or a new job.
The party also said that it would impose a minimum tax of 15 per cent on people in the top tax bracket. The liberal election platform explains the move as removing the ability of high earners to “artificially pay no taxes through excessive use of deductions and credits”.
The Liberals targeted low-income seniors with a $500 increase in the guaranteed income supplement for singles and $750 for couples. Another measure for senior citizens is a promise to work with provinces and territories to increase the Canada Pension Plan and Quebec Pension Plan survivor benefits by 25 percent, which may be available to the spouse of a deceased CPP contributor. .
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