Fifteen-plus years of BC mortgage experience, distilled into practical writing on buying, renewing, refinancing, and building wealth through real estate.
7 Tax Moves That Will Lower Your 2026 Bill More Than You Think
A single contributor to a First Home Savings Account can shield $8,000 from tax this year, and if the money never buys a house, it rolls into an RRSP without touching your contribution room. That's a loophole big enough to drive a retirement fund through, and most people with an FHSA open don't know it exists.
Tax freedom isn't about paying zero. It's about paying what the brackets require and nothing more. Here's what that looks like in 2026.
Max out the FHSA before the RRSP
The FHSA isn't just for homebuyers. Contributions are tax-deductible like an RRSP, but if you don't use the funds for a home purchase, you can transfer the full balance to your RRSP at any time without it counting against your annual RRSP limit. At the current $8,000 annual cap and $40,000 lifetime limit, this effectively expands your retirement shelter by an additional $40,000 over five years. If you're 32, not planning to buy for a decade, and earning $75,000, the FHSA saves you roughly $2,600 in federal tax this year alone. The RRSP limit for 2026 is $33,610, but the FHSA sits on top of that.
Pay December's property tax bill in December
If your municipality lets you prepay your final 2026 property tax installment before December 31 and you're below the $10,000 SALT cap, do it. The deduction moves into the current tax year. Ontario and BC municipalities typically bill quarterly with a final payment due in early January. A $6,000 property tax bill paid Dec 30 instead of Jan 10 can shift the deduction into 2026 if you're itemizing. For self-employed filers or those with rental properties, this timing move stacks with your other deductions and can drop you into the 20.5% bracket instead of 26%.
Use the Multigenerational Home Renovation Credit for a secondary suite build
This one's refundable, which means you get cash back even if you owe no tax. The credit covers 15% of up to $50,000 in renovation costs to create a secondary suite for a senior or an adult with a disability. Maximum benefit: $7,500. The suite must be a self-contained dwelling unit on the same property as your principal residence, with a separate entrance, kitchen, and bathroom. If you're already planning a basement conversion or laneway build for aging parents, the credit makes it functionally $7,500 cheaper. You claim it when you file in spring 2027, but the work has to be completed in 2026.
Melt down RRSP balances during a sabbatical or low-income year
The first $57,375 of income is taxed federally at 15%. If you're taking a year off, working part-time, or between jobs, withdraw enough from your RRSP to stay in that bracket. A $40,000 RRSP withdrawal in a year where you earn only $15,000 from other sources keeps you entirely in the bottom bracket. You'll pay $8,359 in federal tax on that $55,000 total, an effective rate of 15.2%. Had you waited until retirement with a $70,000 pension, that same $40,000 RRSP withdrawal would be taxed at 26% on the portion above $57,375. Strategic de-registration during planned low-income years can save five figures over a lifetime.
Front-load capital gains realizations before mid-year if you're over the $250,000 threshold
The 66.7% inclusion rate on capital gains above $250,000 (introduced in 2024, still in effect for 2026) means you're taxed on two-thirds of the gain instead of half. If you're selling a rental property or non-registered equity position with a $400,000 gain, the first $250,000 is taxed at 50% inclusion, the next $150,000 at 66.7%. Time the sale for early in the year so you have the rest of the year to realize capital losses in other holdings to offset it. A $60,000 capital loss realized in November reduces the taxable portion of that $400,000 gain by $40,000 (66.7% of $60,000). Most people realize the gain in December and have no time left to harvest losses.
Adjust your TD1 form to stop giving the CRA an interest-free loan
The average tax refund in Canada is roughly $2,000. That's $166 a month you could have had in your account all year. If your refund is consistently over $1,500, you're over-withholding. File a new TD1 with your employer and claim additional deductions, RRSP contributions, childcare, union dues, so less is withheld per paycheque. The CRA doesn't pay you interest on your overpayment. Keep the cash flow.
Use the Canada Workers Benefit to eliminate tax entirely at low-to-mid income
The CWB is refundable and can reduce your tax bill below zero. For single filers earning between $24,975 and $34,024 in 2026, the benefit phases in and then out. At $28,000 of working income, the CWB adds roughly $1,400 to your refund. Combined with the Basic Personal Amount of $16,145, non-refundable credits, and strategic RRSP contributions, it's possible to have an effective tax rate near zero on $35,000 of income. This isn't a trick, it's the intended design of the system, and most people eligible don't claim it because they don't know it exists.
A single contributor to a First Home Savings Account can shield $8,000 from tax this year, and if the money never buys a house, it rolls into an RRSP without touching your contribution room. That's a loophole big enough to drive a retirement fund through, and most people with an FHSA open don't know it exists.
Tax freedom isn't about paying zero. It's about paying what the brackets require and nothing more. Here's what that looks like in 2026.
Max out the FHSA before the RRSP
The FHSA isn't just for homebuyers. Contributions are tax-deductible like an RRSP, but if you don't use the funds for a home purchase, you can transfer the full balance to your RRSP at any time without it counting against your annual RRSP limit. At the current $8,000 annual cap and $40,000 lifetime limit, this effectively expands your retirement shelter by an additional $40,000 over five years. If you're 32, not planning to buy for a decade, and earning $75,000, the FHSA saves you roughly $2,600 in federal tax this year alone. The RRSP limit for 2026 is $33,610, but the FHSA sits on top of that.
Pay December's property tax bill in December
If your municipality lets you prepay your final 2026 property tax installment before December 31 and you're below the $10,000 SALT cap, do it. The deduction moves into the current tax year. Ontario and BC municipalities typically bill quarterly with a final payment due in early January. A $6,000 property tax bill paid Dec 30 instead of Jan 10 can shift the deduction into 2026 if you're itemizing. For self-employed filers or those with rental properties, this timing move stacks with your other deductions and can drop you into the 20.5% bracket instead of 26%.
Use the Multigenerational Home Renovation Credit for a secondary suite build
This one's refundable, which means you get cash back even if you owe no tax. The credit covers 15% of up to $50,000 in renovation costs to create a secondary suite for a senior or an adult with a disability. Maximum benefit: $7,500. The suite must be a self-contained dwelling unit on the same property as your principal residence, with a separate entrance, kitchen, and bathroom. If you're already planning a basement conversion or laneway build for aging parents, the credit makes it functionally $7,500 cheaper. You claim it when you file in spring 2027, but the work has to be completed in 2026.
Melt down RRSP balances during a sabbatical or low-income year
The first $57,375 of income is taxed federally at 15%. If you're taking a year off, working part-time, or between jobs, withdraw enough from your RRSP to stay in that bracket. A $40,000 RRSP withdrawal in a year where you earn only $15,000 from other sources keeps you entirely in the bottom bracket. You'll pay $8,359 in federal tax on that $55,000 total, an effective rate of 15.2%. Had you waited until retirement with a $70,000 pension, that same $40,000 RRSP withdrawal would be taxed at 26% on the portion above $57,375. Strategic de-registration during planned low-income years can save five figures over a lifetime.
Front-load capital gains realizations before mid-year if you're over the $250,000 threshold
The 66.7% inclusion rate on capital gains above $250,000 (introduced in 2024, still in effect for 2026) means you're taxed on two-thirds of the gain instead of half. If you're selling a rental property or non-registered equity position with a $400,000 gain, the first $250,000 is taxed at 50% inclusion, the next $150,000 at 66.7%. Time the sale for early in the year so you have the rest of the year to realize capital losses in other holdings to offset it. A $60,000 capital loss realized in November reduces the taxable portion of that $400,000 gain by $40,000 (66.7% of $60,000). Most people realize the gain in December and have no time left to harvest losses.
Adjust your TD1 form to stop giving the CRA an interest-free loan
The average tax refund in Canada is roughly $2,000. That's $166 a month you could have had in your account all year. If your refund is consistently over $1,500, you're over-withholding. File a new TD1 with your employer and claim additional deductions, RRSP contributions, childcare, union dues, so less is withheld per paycheque. The CRA doesn't pay you interest on your overpayment. Keep the cash flow.
Use the Canada Workers Benefit to eliminate tax entirely at low-to-mid income
The CWB is refundable and can reduce your tax bill below zero. For single filers earning between $24,975 and $34,024 in 2026, the benefit phases in and then out. At $28,000 of working income, the CWB adds roughly $1,400 to your refund. Combined with the Basic Personal Amount of $16,145, non-refundable credits, and strategic RRSP contributions, it's possible to have an effective tax rate near zero on $35,000 of income. This isn't a trick, it's the intended design of the system, and most people eligible don't claim it because they don't know it exists.
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