• The federal budget proposes to increase the withdrawal limit for first-time homebuyers using the Homebuyers Plan from $20,000 to $25,000 (per individual).
• Under this program, first-time homebuyers are allowed to withdraw funds from their RRSP, tax-free, to put towards the down payment on a home. Amounts withdrawn under the HBP must be repaid over a 15-year period, starting the second year following the year of the withdrawal.
• Since 1992, an estimated 2 million Canadians have used the Home Buyers’ Plan to purchase approximately 900,000 homes, making this program a huge success. Unfortunately, as time has passed, the usefulness of this program eroded because withdrawal limits were not adjusted. For this reason, REALTORS® lobbied the federal government to increase the Home Buyers’ Plan withdrawal limit to $25,000.
First-Time Home Buyers’ Tax Credit
• The Budget proposes a 15 per cent credit that would be applied to a $5,000 amount, and would provide up to $750 in tax relief to reduce costs associated with first home purchases.
• To assist first-time home buyers with the costs related to the purchase of a home such as legal fees, land transfer taxes, etc.
Home Renovation Tax Credit
• The Budget proposes a 15 per cent credit to be claimed on the portion of eligible home renovation expenditures exceeding $1,000, but not more than $10,000, meaning that the maximum tax credit that can be received is $1,350.
• Will apply to eligible home renovation expenditures for work performed, or goods acquired, after January 27, 2009 and before February 1, 2010, pursuant to agreements entered into after January 27, 2009.
• Credit can be claimed on eligible expenditures incurred on one or more of an individual’s eligible dwellings, including houses, cottages, and condominium units owned for personal use.
• Additional information available here
Source: TREB ( Toronto Real Estate Board)