Monday, February 23, 2009

Tax Rebates for First-Time Buyers and Homeowners

The recent federal budget has a few bonbons for Canadian homeowners, including tax rebates to help offset the cost of home renovations and more money for energy retrofits.
First-time buyers will will get two boosts. Ottawa will allow first buyers to withdraw an additional $5,000 from their RRSPs to use as a down payment on their purchase. That brings the limit to $25,000, or $50,000 per couple. This is the first time the RRSP limit has been increased since the first home buyers program was introduced in 1992.
It goes without saying that housing prices have climbed substantially since 1992 (when Garth Brooks ruled the pop charts and a single-family home could be had for about $116,000 in Montreal.) Don't forget, you have two years to start paying the money back into your RRSP and must repay the amount in full within 15 years.
Ottawa has also announced a 15-per-cent tax credit to help buyers offset closing costs on their first home purchase.
Details as yet are sketchy. Buyers can claim the rebate on items such as notarial fees and what are described as "land-transfer fees". In Quebec, that could translate to help with the pesky "welcome" tax billed to buyers withing 60 days of taking possession of a property. Are other fees related to the home purchase - inspection fees, for example - eligible? So far, the clerks at Services Canada are not able to say. Save your receipts and talk it over with your accountant when you file your 2009 income tax return.
The 15-per-cent home renovation tax rebate kicks in when you spend more than $1,000 and up to a maximum of $10,000 on a wide range of improvement projects. It covers labour and materials but does not cover the purchase of tools, furniture or regular maintenance and cleaning. The maximum credit is $1,350.
Quebec introduced its own home-renovation tax credit in January, though with much less fanfare than Ottawa. The rules are different, the time frame is different and the spending requirements are different, too. Basically, you will be eligible for a 20-per-cent tax rebate on renovation projects that cost more than $7,5000, to a maximum of $20,000. The work must be done by a "qualified professional". A gold star for you if you do the work yourself, but sadly, no tax break.
Click here for more info.

1 comment:

Hi, in an effort to cut down on spam, I will now be moderating comments prior to publication. If you're a real person with a real comment or question, I'll get to you as soon as I can. Thanks!