How to use equity to buy a second home + MORE Dec 6th

Ottawa set to announce cap-and-trade framework to reduce emissions in oil and gas sector  CBC NewsCanada’s oil and gas emissions cap to use cap-and-trade system, be less stringent than expected  The Globe and MailCanada Says ‘Hold My Labatt’ After U.S. Methane Rules Finalized  Natural Gas IntelligenceOpinion: Federal emissions cap a slap in the face to Indigenous peoples  Edmonton JournalGUNTER: Trudeau’s eco ego stifling investment in Canada  Toronto Sun

Taxes are an inescapable fact of life in Canada. Despite this, many of us don’t think too hard about the specific federal and provincial tax brackets that govern our taxable income. Nonetheless, understanding what bracket we fall into is key to accurately estimating the amount of tax we owe on our 2023 earnings. This knowledge is particularly valuable if you are self-employed or engaged in a side gig where you’re responsible for figuring out your own tax payments. (You wouldn’t want to accidentally get on the wrong side of the Canada Revenue Agency, would you?)

An understanding of the provincial and federal tax brackets can also help you decide if you should increase your registered retirement savings plan (RRSP) contributions. Doing so could help you reduce any outstanding balance on your notice of assessment (NOA) to zero or, if you’re lucky, get a refund.

How do tax brackets work in Canada?

Tax brackets outline the proportion of income tax that we need to pay based on annual earnings…

Whether it’s for a cottage, a vacation home or a rental property, using your home’s equity can be an excellent way to buy that second home you’ve been dreaming of. 

“Potential buyers may not have the cash they require to pay for an asset like a second home in part or in full,” says Maxine Crawford, a mortgage broker with Premiere Mortgage Centre in Toronto. “They may have their money tied up in investments that they cannot or do not want to cash in. By using home equity, however, a buyer can leverage an existing asset in order to purchase in part or in full another significant asset, such as a cottage.”  

What is home equity?

Home equity is the difference between the current value of your home and the balance on your mortgage. It refers to the portion of your home’s value that you actually own. 

You can calculate the equity you have in your home by subtracting what you still owe on your mortgage from the property’s current market value. For example, if your home has an appraised value of $800,000 and you have $300,000 remaining on your mortgage, you have $500,000 in home equity…