Written By Daniel PatchingThe Vancouver Mortgage Broker
First-Time Home Buyers (FTHB) Tax Credit
The costs associated with purchasing a home, such as legal fees, disbursements and land transfer taxes, can be a partiular burden for first-time homebuyers who must pay these costs, as well as save money for a down payment. To assist first-time homebuyers with the costs associated with the purchase of a home, the Government of Canada introduced a FTHB Tax Credit in 2009 – a $5,000 non-refundable income tax credit amount on a qualifying home acquired after January 27th, 2009. For an eligable individual* the credit will provide up to $750 in federal tax relief starting in 2009.
*An eligable individual is someone that acquired a qualifying home; and did not live in another home owned by them or their spouse or common-law partner in the year of acquisition or in any of the four preceding years.
If you are a person with a disability or are buying a house for a related person with a disability, you do not have to be a first-time home buyer. However, the home must be acquired to enable the person with the disability to live in a more accessible dwelling or in an environment better suited to the personal needs and care of that person.
Expansion of the Home Buyers Plan
To provide first-time homebuyers with greater access to their RRSP savings to purchase or build a home, the Government of Canada has increased the Home Buyers Plan withdrawal linit to $25,000 from $20,000 per person for withdrawals made after January 27th, 2009. What this means is that each first time home buyer can withdrawal up to $25,000 from their RRSP without being taxed.
The power of $475,000
As a FTHB, purchasing something less than or equal to a purchase price of $475,000 will allow you avoid paying for property transfer tax*. This is a one time offer for FTHB’s and cannot be used when purchasing a second home. By purchasing your first home for less than, or equal to $475,000 could save you thousands.
*Property Transfer Tax equals 1% of the first $100,000 and 2% of the rest. For ex. Home price = $600,000. Therefore property Transfer Tax would be (1% of $100,000) + (2% of $500,000) = $11,000
Looking for more home buying Information?
Feel free to contact me and I'd be more than happy to provide you with more information in regard to the first-time home buying process.