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Budget 2009 - First Time Home Buyer Benefits

By Raj Khurana

Real Estate Agent with RE/MAX R.E. (Mountain View)

January 27, 2009 04:30 PM

Great news for all Canadian First Time Homebuyers

Withdrawal Limits under the Home Buyers' Plan proposed to be increased

The Home Buyers' Plan (HBP) allows first-time home buyers to withdraw up to $20,000 from a Registered Retirement Savings Plan (RRSP) to purchase or build a home. Unlike regular RRSP withdrawals, HBP withdrawals are not included in an individual's income when withdrawn. Amount withdrawn under the HBP must be repaid over a 15-year period, starting the second year following the ear of the withdrawal. Otherwise the amount gets included in the individual's income.

To provide first-time home buyers with additional access to their RRSP savings to purchase or build a home, Budget 2009 proposes to increase the HBP withdrawal limit to $25,000 from $20,000 in respect of withdrawals made after January 27, 2009.

With the $5,000 increase to the withdrawal limit, two first-time home buyers purchasing a home jointly (e.g. a married or common-law couple) with sufficient RRSP funds in each of their names may now together withdraw up to $50,000 from their RRSP funds toward the purchase of a home in Canada.

Hope this will help many homebuyers put a bigger down payment and help thm qualify for a mortgage more easily in this tighter market.

First-Time Home Buyers' Tax Credit

To assist first-time home buyers with the costs associated with the purchase of a home, such as legal fees, disbursements and land transfer taxes, Budget 2009 proposes to introduce a First-Time Home Buyers' a $5,000 non-refundable income tax credit amount on a qualifying home acquired after January 27, 2009. For an eligible individual, the credit will provide up to $750 in federal tax relief starting in 2009.

There could be no better time to buy with these benefits coupled with the lowest ever interest rate.

Happy buying!

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Fred Carver Real Estate Consulant

Retired BC Realtor - Victoria, BC

Accredited Real Estate Consultant

Hi Raj...Great post on the New Rules using the Home Buyer Tax Credit. Be sure to add Localism to your Group Post and include your area(city)

Cheers, thanks for sharing !

Feb 01, 2009 03:00 PM

Sonia Christof

ReMax a-b Realty - Shakespeare, ON

It's important to have those first time home buyers. They push up everyone else to upgrade. I found that when I explained the first time home buyers credit for the land transfer taxes, it scared the buyers! They had no idea that closing costs were so high and were concerned about what else they were going to get hit with. A tax credit is a great idea!

Feb 05, 2009 07:17 AM

Jenny Kotulak

RE/MAX Real Estate Centre Inc., Brokerage - Oakville, ON

Broker - Oakville Ontario Real Estate

I love first time buyers. They are going to drive this "new" market. And welcome to Ms. Christof who just joined AR. Sonia sent me a referral a few months again for which I am grateful. I just sold a house this week to first time buyers. A pleasure to deal with. And it was a referral also from a RE/MAX Agent in Collingwood. So now we just have to start doing some AR referrals. Hope all is well out your way Raj and Fred.

Feb 06, 2009 04:25 PM

Anonymous

friend

My common-law partner and I are looking into purchsing a home together, I am a 1st time home buyer but he is not......do I still qualify to withdraw my rrsps on the HBP towards our potential new home?

Jul 19, 2009 11:11 AM

Raj Khurana

RE/MAX R.E. (Mountain View) - Calgary, AB

Realtor - Link to Calgary Homes

Hi Friend,

It depends on a whether you stayed in that house as well as the time when your common law partner owned that house.

Please go to the following link to read more.

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/cndtns/frst-eng.html

Good luck with your purchase!

Jul 20, 2009 12:55 PM

Budget 2009 - First Time Home Buyer Benefits

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Raj Khurana

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