Here’s a selection of personal finance stories that were popular with Globe and Mail readers in 2024 and likely to be relevant in the year ahead:
A deep dive on the OAS clawback: How many people are affected, and how much does it cost them?
Fear and loathing of the clawback of Old Age Security benefits for high earners is a central theme of retirement planning. The OAS clawback is actually a luxury problem right now in that it has recently affected about 8.3 per cent of total OAS recipients, or about 500,000 people.
But that could change as the federal government looks for ways to contain the soaring cost of OAS, which accounted for about 15.5 per cent of the total amount of money taken in for the fiscal year ended March 31, 2023. One option is lowering the income threshold where the clawback starts, which is $90,997 for 2024.
Her husband collected CPP for only seven years – where did the rest of his contributions go?
A reader got in touch to complain about the smallness of the Canada Pension Plan survivor’s benefit she started receiving after the death of her husband. The average amount of this benefit for new beneficiaries 65 and older was just $323.05, so you can understand the frustration.
The federal Liberals promised a 25-per-cent increase in the survivor’ benefit, but so far haven’t delivered. With an expected election in 2025, might we see this promise resurface?
People keep making this costly TFSA mistake – and paying penalties averaging almost $1,500
Over-contributions to tax-free savings accounts resulted in total penalties of $132.6-million in 2022, with an average penalty of $1,461.18. A big reason for these penalties is that people are using outdated information on their contribution room from the My Account portal for the Canada Revenue Agency.
It takes until roughly April or May for CRA data on TFSA contribution room to accurately reflect money added to these accounts in the previous calendar year. As much as you may want to start taking your TFSA in hand in early 2025 by checking your contribution room on My Account, you should wait.
Own a cottage or investment property? Here’s how to navigate the new capital gains tax changes
The 2024 federal budget proposed to increase the inclusion rate on capital gains greater than $250,000 to two-thirds from one half, starting June 25, 2024. A 50 per cent inclusion rate would continue to apply for the first $250,000 in gains.
Legislation to implement the change has not yet been passed, but the Canada Revenue Agency is proceeding as if this will happen. If the minority Liberal government falls before the legislation passes, we will likely not see the higher capital gains inclusion rate.
Facing a costly mortgage renewal, this family decided to downsize and instead saved thousands
Trading space for financial independence, a family of four moves to a townhome from a 2,700-square-foot home. A big factor in the decision was a looming mortgage renewal at a higher interest rate.
Canada Mortgage and Housing Corp. says 1.2 million mortgages come up for renewal in 2025, most of them at much higher interest rates. Back in 2020, you could get a five-year fixed rate mortgage around 2 per cent or less. The comparable rate today is a lot more at roughly 4.2 per cent, but at least we’re down from peak levels around 5.5 per cent.
Consider the variable-rate alternative. You’ll get a slightly higher rate today than with a fixed-rate mortgage, but there’s potential for several rate reductions next year as the Bank of Canada continues the 2024 trend of lightening the load on borrowers to support the economy.
It’s maddening to say, but now might be a generational opportunity to buy a first home
Mortgage rate declines in 2024 helped stabilize the housing market at prices that remain well below the peak of early 2022. Houses remain unaffordable for many in some cities, but we may not see better buying conditions than we have right now.
The average November resale home price of $694,411 was 7.4 per cent higher than the same month of 2023, which suggests the market may already be heating up. Your best housing market intel may just come from the job market. What scares housing industry people the most is a jump in the unemployment rate.
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