“Although it is not Linda’s intention to have the loans repaid, it provides her with a safeguard if needed,” the planner says. Any loans should be properly documented with an agreement prepared by a lawyer. There are other pros and cons to making loans or outright gifts to children and they should also be reviewed with the lawyer.
In January, 2024, Linda will be able to contribute $61,500 to her tax-free savings account. She must wait until then to recontribute the $55,000 she withdrew in 2023 for the condo renovations, Ms. Berman says. Plus, she will have new annual contribution room of $6,500 for 2024. As long as Linda has non-registered investments, she should continue to contribute the annual maximum each year to her TFSA.
The balance of the sale proceeds is to be invested in Linda’s non-registered account. Her current investments, RRSPs and TFSA are invested 95 per cent in equities. “Linda should review with her investment adviser the high equity weighting to ensure it is aligned with her risk tolerance,” Ms. Berman says. Because Linda will have additional funds to add to her investments, this is an opportune time to adjust the asset mix to her overall risk profile.