|  How the 2022 federal budget will impact your pocketbook On Thursday, Finance Minister and Deputy Prime Minister Chrystia Freeland unveiled the 2022 federal budget with a number of measures aimed at making life more affordable for Canadians. The spending document set aside $475 million for a round of one-time payments of $500 to Canadians facing "housing affordability challenges." The Liberals also made good on their promise to the NDP on dental care. The government plans to launch a dental program for people with household incomes of less than $90,000 this year. It will begin by providing dental care for kids under 12 in households with an annual income of less than $70,000 in 2022. The program will be broadened out to other age groups next year. The federal government is also looking to implement a new pilot project that could help make menstrual products more accessible. Under the proposal, Women and Gender Equality Canada would receive $25 million over two years to establish a Menstrual Equity Fund. Global News reporter Craig Lord has more pocketbook budget highlights here.  Making housing more accessible A cornerstone of this year’s budget was housing, with the feds earmarking $10.14 billion over the next five years to make shelter more affordable in this country. One of the key measures introduced was a tax-free savings account — the Tax-Free First Home Savings Account (TFFHSA) — for first-time homebuyers. Under the new plan, prospective homebuyers would be able to save $8,000 per year to a maximum of $40,000 per person towards the purchase of a first home. Withdrawals from a TFFHSA would be non-taxable, including any investment income generated within the account. Contributions are also tax-deductible, like a registered retirement savings plan. The budget also includes plans to double the pace of homebuilding in Canada over the next decade and limit profiteering. Read more about the housing measures from the 2022 federal budget here.  A 50-basis point interest rate hike? The Bank of Canada is due to make its next interest rate decision April 13. Economists are expecting a 50 basis points increase – the first since 2000. This would bring the central bank’s key overnight lending rate to 1.0 per cent. Avery Shenfield, chief economist with CIBC World Markets, said in a note Monday that elevated inflation expectations tied to the bank's business outlook survey "cement the case" for an interest rate hike of half a percentage point. The goal with raising rates is to tame red-hot inflation, which hit 5.7 per cent in February – the highest level in more than 30 years. However, higher interest rates mean the cost of borrowing for things like cars and homes will creep even higher for Canadians. Read more about what to expect from the Bank of Canada here. ________________________ – THE QUESTION – “I will have my mortgage paid off in May 2022, and I am thinking of taking the funds I paid per month ($4,000) and some other funds to buy a home with my daughter. I anticipate that at least for the next five years, I will be on the mortgage. My daughter will sell her condo and use those funds as a down payment and then pay a portion of the mortgage and live in the home. I am planning to live in my own house. Are there any tax implications for me?” — A Money123 reader “Families often inquire about buying real estate together or having parents cosign for their children to purchase a home. Careful planning is crucial to achieving your goals without family friction. Regarding tax implications, if your daughter will reside in the new house and you are not receiving rental income, there is no tax payable. When sold in the future, you’ll pay capital gains on the increase in value, only on your share of ownership of the home (her portion will be exempt if it is still her principal residence at the time of the sale). Property transfer tax may be required in your purchase costs, depending on which province you’re buying in. You’ve mentioned you expect to be on the mortgage for the next one-to-five years; please note that you’ll need to be on the mortgage for as long as you own the home. All property owners must always be on the mortgage; this prevents mortgage fraud (someone mortgaging your property without your knowledge). An experienced mortgage professional can help you create a purchase and mortgage plan that meets your current and future financial goals” -Nicole Hayes, mortgage broker, www.bcmortgageexpert.com
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