Future Planning: What's In Store for 2023

As 2022 comes to a close, many Canadians are wondering what outlook for managing personal finances, mortgages, and tax planning is in store for 2023.

According to sources from the Desjardins Financial Group, the following considerations should be top of mind for homeowners and home buyers when planning for 2023.

Learn to Navigate A turbulent Market

2023 is expected to be turbulent due to dragging inflation and the correlating negative impact to buying power, declining investment value from continued market volatility, and higher borrowing costs due to higher interest rates. 

To manage this, it is recommended to review and establish your budget before any big decisions such as taking out or renewing a mortgage. Factor in much higher borrowing costs and consult a financial advisor to determine the best options for your budget, such as whether to choose a fixed or variable rate and the term of your loan. 

See the below table to illustrate the impact of higher borrowing costs on a mortgage:

Buying a Home 

The Federal Government has several programs available for first-time homebuyers to promote buying a home regardless of home selling prices and interest rates. 

• Home Buyers’ Plan (HBP) allows Canadians to use up to $35,000 from a registered retirement savings plan (RRSP) for a down payment on a first home

• First-Time Home Buyer Incentive (FTHBI) allows home buyers to get a mortgage with federal government "participation" which will aid in decreasing your monthly mortgage payments. 

• Tax-free “first home” savings account (FHSA) for first-time home buyers to save on a tax-free basis.

TFSA and RRSP: Rules To Follow

A fantastic way to maximize tax deductions is to make additional RRSP contributions for 2022. Also, any contribution made in the first 60 days of 2023 can be applied to either 2022 or 2023. However, if planning to withdraw from an RRSP, it is advised to take it out by the end of 2022. There would be hefty penalties if you make a withdrawal and also large contributions to your TFSA in 2023. Lastly, the TFSA contribution limit, currently $6,000 per year, is expected to increase in 2023, giving more opportunities to maximize deductions.

Take Advantage Of Tax Credits For Families!

Tax legislation provided at both federal and provincial levels will provide multiple tax credit and deduction opportunities for families, child care, and caregivers. Check out The Government of Canada’s webpage and external pages for each province of the type of credits/deductions available. Please note: to claim deductions and credits on income tax returns filed in 2023, the situations and expenditures that qualify must have been carried out in 2022.