Toronto real estate. Mortgage news

Real Estate Agent with Right at Home Realty Inc., Brokerage

2009 has started off on the right foot. We have a new federal budget from the ministry of finance that have left most of us a little less concerned with the housing market. Now, first time home buyers in Canada are able to withdraw $25,000.00 from their RRSPs to make a down payment - previously $20,000.00. In addition, existing home owners can receive a tax break of up to $1,350.00 for renovating their current home.

What else can I say about the housing market other than what goes up, must come down and go back up again! The rise and fall of the housing market is a realty so let's gain some perspective on the situation. Affordability has never been better with record low interest rates so if you're buying a home, looking to consolidate your debts, or want to renovate your existing home - give me a call and I'll negotiate financing that's tailored to your particular needs.

The small gains potential home buyers won from the federal budget won't necessarily re-spark activity in the declining residential real estate sector, but they are part of the program to offer incentives for consumers to spend.

In the budget, Finance Minister Jim Flaherty raised the amount first-time home buyers can withdraw from their RRSPs to make a down payment: $25,000 for individuals, up from $20,000; and $50,000 for couples, up from $40,000.

Also for the first-timers, Flaherty included a 15-per-cent tax credit on closing costs to a maximum of $5,000, which would be worth $750 off a buyer's federal tax bill.

"Perhaps none of these things in and of themselves will be the turning point, " said Jim Murphy, CEO of the Canadian Association of Accredited Mortgage Professionals. "But they all help, and really it's the issue of government trying to deal with the whole issue of consumer confidence."

Murphy said the RRSP home buyer program, first initiated in 1992, has been very popular, and that more buyers "than you might think" take advantage of it.

Buyers can withdraw money from their retirement investments tax-free for part of their down payment as long as they pay it back into their RRSP accounts within 15 years.

The federal government has estimated that increasing the limit will cost $15 million a year over the next two years.

The tax credit on closing costs is expected to be more expensive, costing the federal treasury $30 million in fiscal 2008-09, $175 million in 2009-10 and $180 million in 2010-11.

The mortgage industry and realtors have been advocating increasing the limit on RRSP withdrawals to keep step with rising home prices for a long time, Murphy said, and he expects there will be buyers who take the extra money.

And while the $10,000 increase in the limit for a couple might not be a huge increase, Murphy said it can help reduce the principal on mortgages, or help push buyers over the threshold for not requiring mortgage insurance.

"Every little bit helps," Murphy said.

Dave Watt, president of the Real Estate Board of Greater Vancouver, added that home sales have considerable spinoffs in terms of the furniture new homeowners buy and home improvements they make.

The idea of Flaherty's budget was to encourage average people to spend, according to Lincoln Schreiner, a Vancouver-based tax-practice partner in the firm PricewaterhouseCoopers. "When you go into a situation where people start to talk socially about whether their job is going to be there or not, you're going to be more cautious, " Schreiner said.

"People start cutting back on spending, and it becomes like a tidal wave."

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