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REAL ESTATE CORNER: First time homebuyer? Catch a break with these government programs!
7-29-2015
You’ve taken a look at your finances, calculated your budget, and have decided that the time to make a move into the world of home-ownership has finally arrived. Being a first time homebuyer is an exciting time – a major step of independence for those moving out of the parental home, and the ability to kiss your landlord goodbye for others!
Though it may seem like you need to keep digging into your pocket to pay for expenses when purchasing a home: lawyer/notary fees, home inspection, insurance, and taxes just to name a few – there are some breaks that the government grants to first-time buyers for qualifying purchases…and while they may not seem like much, hey…maybe you can splurge on those granite countertops in the kitchen now!
One of the first that comes to mind is the Property Transfer Tax. Typically, when buying a home you need to pay a tax of 1% on the first $200,000, and 2% on the balance. So long as you purchase a home within certain criteria, the government will rebate this tax. A full rebate is granted to qualifying first time homebuyers buying a home with a purchase price of up to $475,000. If you purchase a home between $475,000 and $500,000 there is a proportional exemption, however any home that is purchased for over $500,000 disqualifies you from this rebate. If you’re looking for a condo or a town home within this price point there’s lots to pick from, but if you’re looking for a solid detached single family home under $475,000 they are getting harder and harder to find!
Another program offered by the federal government is a tax credit you claim when filing your tax return for the year – it’s on line 369 (home buyers amount) – a non-refundable tax credit of $5000, which translates to up to $750 off your taxes. This amount can be shared between eligible couples, but the total credit amount claimed cannot exceed $5,000. Unlike the Property Transfer Tax rebate, there is no restriction on the purchase price of the home – so even if you’re a first time home buyer purchasing a home for $600,000, you should still qualify for this credit.
The homebuyer plan – offered through your RRSP’s is another great program to take advantage of. While this won’t exactly put money into your pocket, it allows qualifying individuals to withdraw up to $25,000 from their RRSP’s to use toward the purchase of their home - without having to pay any penalty or needing to include the funds as income for the year withdrawn. You have the option of repaying the amount you ‘borrow’ from your RRSP over a maximum of 15 years - or if you’d rather not - you will have to declare the amount as income on your tax return (a portion over 15 years).
Keep in mind that as all the above programs are subject to change at any time, and have various qualification requirements, please make sure to check out the relevant government websites for full details. And remember, although a penny saved is a penny earned – trust me, at the end of the day you’ll be better off just listening to your better-half and updating that kitchen with your first-time home buyer savings instead!
This column is presented as a general source of information only and is not intended as a solicitation for business. Ibraheem Dean Hassan is a Sutton West Coast Realtor® who works with genewatt.com across the Lower Mainland.
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