Year-End Tax & Market Update – October 2025 (And What It Means for Homeowners)
As we head toward the end of 2025, it’s a good time to look at two things that matter a lot to most of my clients:
Smart year-end tax moves
Where interest rates and the housing market are heading
This overview is based on a recent update from RBC Dominion Securities and is meant as general information only. Always speak with your own tax professional or financial advisor before acting on any of these ideas.
1. Year-End Tax Planning Checklist for Individuals
Before December 31, it’s worth taking an hour to review your situation. A few simple steps now can make a real difference when you file your 2025 return.
a) Tax-loss selling
If you realized capital gains this year and also hold investments currently sitting at a loss, your advisor may be able to sell some of those losing positions to offset gains and reduce tax.
The key is to do it properly so you don’t trigger the “superficial loss” rules, so this one is best done with professional guidance.
b) RRSP withdrawal timing
If you’re nearing retirement and expect to be in a lower tax bracket in 2025 than in 2026 and beyond, it may make sense to take some RRSP income before year-end.
The idea: withdraw when your tax rate is lower overall.
Doing it later in the year means less time that withholding tax sits with the government.
Again, this needs a personalized look at your income and plans.
c) Charitable donations
Charitable giving can reduce your income tax and support causes you care about.
Deadline: Donations must be made by December 31, 2025 to count on your 2025 return.
You’ll receive a donation receipt if the charity is registered.
d) TFSA contributions
If you haven’t used your Tax-Free Savings Account (TFSA) room for 2025, you can still:
Contribute up to $7,000 for 2025, and
Catch up any unused room from 2009–2025 (total available room up to $102,000, assuming full eligibility).
Investment growth and withdrawals in a TFSA are tax-free, which makes it a powerful long-term planning tool.
e) FHSA contributions (First Home Savings Account)
For first-time home buyers or those who qualify, the FHSA blends features of an RRSP and TFSA.
Contributions made by December 31, 2025 can be deducted against your 2025 income.
You only start building FHSA room once the account is opened. You can carry forward up to $8,000 of unused room into the following year.
If you plan to contribute in 2026, opening the FHSA in 2025 can give you up to $16,000 in room for 2026.
This is a very powerful tool when planning for your first home purchase.
f) RESP contributions
If you have children or grandchildren, consider topping up RESP contributions by December 31, 2025 to:
Capture the Canada Education Savings Grant (CESG), and
Benefit from tax-deferred growth inside the plan.
RESPs are one of the most efficient ways to help with future education costs.
g) Pay 2025-eligible expenses before year-end
For many credits and deductions, you need to have actually paid the expense in the calendar year to claim it for that year. Examples can include:
Investment management fees
Tuition fees
Accounting and legal fees (if deductible)
Childcare expenses
Spousal support
Eligible medical expenses
Certain business expenses that flow through to your personal return
If it’s your intention to claim these on your 2025 return, aim to have them paid by December 31, 2025.
2. Market Update – Interest Rates & the Economy
So where are we now in the bigger picture?
Recent rate cuts
Both the U.S. Federal Reserve and the Bank of Canada have lowered their benchmark interest rates by 0.25% in recent months.
For the Fed, this was the first cut since December 2024.
The Bank of Canada followed with its own quarter-point cut.
Why?
Labour markets in both countries have shown signs of softening.
Inflation readings have been more manageable than many expected.
That combination gives central banks some room to ease off and support economic growth.
Canada, in particular, has seen inflation kept in check by improved trade conditions and the removal of some retaliatory tariffs. The Bank of Canada has been clear that it will “proceed carefully” from here, there’s no promise of a quick series of cuts, but the direction has shifted toward easing.
Economic implications
Rate-sensitive sectors are usually the first to feel the impact of easier financial conditions, and housing is at the top of that list.
In Canada, housing activity improved over the summer, helped by lower prices in some
segments and better inventory in many markets.
At the same time, we’re still dealing with affordability constraints, slower population growth compared with the post-pandemic surge, and general economic uncertainty.
Lower borrowing costs can offset some of that pressure and bring more buyers back into the conversation.
Beyond real estate, more cyclical and economically sensitive areas, such as small- and mid-cap companies or lower-quality corporate borrowers, can also benefit when borrowing costs decline. The main risk to watch is inflation: if central banks cut too aggressively, renewed inflation concerns could create volatility again.
3. What This Means for Homeowners & Buyers
From a real estate perspective, here’s how this environment generally plays out:
For existing owners:
Lower rates can ease payment pressure at renewal and help support home values over time, especially in markets where demand is already strong.For buyers:
Improved affordability from lower rates can help more buyers qualify, though stress tests and lending standards still apply. If you’ve been on the sidelines, this is a good time to review your numbers and see what’s realistic.For sellers:
A more stable rate environment, combined with better inventory balance, tends to support healthier, more predictable markets. Pricing correctly and presenting the home well remain crucial.
Final Thoughts
Central banks are trying to strike a balance between:
Keeping inflation under control, and
Supporting a labour market that’s showing signs of cooling
As they navigate that trade-off, we can expect some market ups and downs. The key for homeowners and buyers is to stay focused on your own time frame and goals, not the headline of the day.
If you’d like to talk about how the current interest rate environment and year-end planning might affect:
Your home’s market value
A potential sale or purchase in 2026
A renewal or refinance decision
I’m happy to walk through your options.
If you're navigating this dynamic market, whether buying or selling, let's talk strategy. Our team can guide you through the most efficient processes, aiming to save you time, money, and hassle.Contact us today, and let's make your real estate journey successful!
