Vancouver’s First Time Home Buyer’s to benefit from Federal Government’s 2009 Economic Stimulus Plan
The federal government's 2009 economic stimulus plan includes benefits aimed at helping first time home buyer's (FTHB) entering the real estate market. The first benefit will be in the form of a 15% tax credit to help with closing costs, legal fees and other charges. The second benefit will be an increase in the amount of money FTHB's can withdraw from their registered retirement savings plan.
Home Buyer's Tax Credit
The Homebuyer's Tax credit as outlined in the 2009 stimulus plan will be non-refundable, and based on an amount of $5,000, for certain home buyers that acquire a qualifying home after January 27, 2009 (i.e., closing after this date). It will be calculated by multiplying the lowest personal income tax rate for the year (15% in 2009) by $5,000. For 2009, the credit will be $750. People can qualify for the tax credit if:
- acquire a qualifying home (see below) and
- neither the individual nor the individual's spouse or common-law partner owned and lived in another home in the year of purchase or any of the four preceding years.
An exception is made if you are a person with a disability or are buying a house for a related person with a disability. Then you do not have to be a first time home buyer. However, the home must be acquired to enable the person with a disability to live in a more accessible dwelling or in an environment better suited to the personal needs and care of that person.
A qualifying home is any existing home or home being constructed that is in Canada. Single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, and apartments in duplexes, triplexes, fourplexes, or apartment buildings, all qualify. A share in a co-operative housing corporation that entitles you to possess and gives you an equity interest in a housing unit located in Canada also qualifies. However, a share that only provides you with a right to tenancy in the housing unit does not qualify.
As well, you or the related person with a disability must intend to occupy the home as a principal place of residence no later than one year after buying it.
Spouses, common law partners, or even if you purchase a home with a friend, you can still claim the tax credit but the total of both your claims cannot exceed $750 and you must meet the agreed upon conditions.
A new line will be added onto the tax return form, starting in 2009, allowing you to claim the credit.
For more details visit Department of Finance's Budget 2009.
Registered Retirement Savings Plan (RRSP) Increase
The federal government has increased the amount that first time home buyers can withdraw from an RRSP without penalty. It is now possible to withdraw up to $25,000 to use as a down payment on a home. Couples that jointly purchase can withdraw up to $50,000. Previously the maximum amount allowed without facing any penalty was $20,000 and $40,000 for couples.
The government believes these benefits as part of the economic stimulus plan will have a positive impact. By helping relieve some of the cost burden faced by first time home buyers but also by giving incentive to those still contemplating whether or not to enter the housing market. If successful it will help stimulate the housing sector through an increase in demand for labour, building materials and other goods.
For more information on buying or selling a home in today's real estate market, contact Vancouver Realtor Dean Wegman or Royal LePage Westside by clicking here.
