This week, I’ve got a good “segue”, as I bring to your attention some preliminary details of my next investor presentation.
Recall in our conversation with Anthony Scilipoti from Veritas, he felt there might some government initiatives to “help” home buyers, but that those initiatives won’t amount to much. This week, the Federal government tabled the new Budget (and new shoes were purchased!), and addressed the hot Canadian housing Market.
The Minsters new shoes by the way, are part of a long, if slightly strange, tradition of Canadian finance ministers purchasing new shoes for the budget reading (LINK). The footwear is meant to symbolize what kind of year the public can expect.
The government has come up with a “Tax-Free First Home Savings Account” (FHSA), a proposed $40,000 saving vehicle to help first time home buyers in this years’ Budget.
On the surface it’s a neat hybrid tax initiative: first time home buyers can make contributions into it, and get the same deductions against income as they would for a RRSP. Similar to a TFSA it grows tax-free, and they can be withdrawn at any time, as opposed to being locked in like an RRSP. A few practical issues however, which may temper enthusiasm and/or effectiveness:
- You can only contribute $8,000 per year (so presumably in 5 years this will help)
- It is expected to start in 2023
- Many people (including myself) used the Home Buyers Plan, which allows for a withdrawal from the RRSP for the purchase of a first time home. Oddly, you will not be permitted to make both an FHSA withdrawal and a withdrawal under the Home Buyers’ Plan (HBP) in respect of the same qualifying home purchase
- Unlike a TFSA or RRSP, it’s a use it or lose it: If you contribute less than $8,000 in a given year, the excess will not be carried forward
- With homes in the GTA hitting average sale prices of over $1.2MM: the impact of this initiative is yet to be determined. I think the expression is :”it’s better than a kick in the teeth”!
So the Federal Budget alludes to what was the subject of our last seminar: “Where is the Canadian Real Estate Market Headed”. But the focus of this budget is the effects of inflation: “While this budget shifts away from pandemic measures, other current events and realities are at the forefront. These include inflation, housing affordability, the transition to a green economy, and supporting Ukraine…” For those who won’t be watching the Master’s this weekend, here’s a link to comments on the budget BUDGET LINK.
On Wednesday, May 18th (the day before the day before the start of the long weekend: I checked!), what better way to ease into the long weekend than with a discussion about “What can investors do in this period of rising inflation”. More details to follow in the next few weeks, but its anticipated to start again at 4:00.
As for the Masters: its back with a regular crowd, and normal time period. As much as a Tiger Woods win would be a huge accomplishment, it’s going to be Colin Morikawa who wins!