Help for 1st Time Buyers

HOME BUYERS’ PLAN (OR USING YOUR RRSPs TOWARD THE PURCHASE PRICE OF YOUR HOME)

First time home buyers as defined by Revenue Canada may qualify to use up to $25,000 from their RRSPs toward the cost of purchasing a home to be used as their principal residence. You must take possession of the home within one year of the purchase taking place. If you meet all the requirements when the money is withdrawn from your RRSP you are not taxed on the amount withdrawn as would normally happen.

The definition of a first time buyer in this situation is rather complex. It does not necessarily mean you have never owned a home previously.  To see if you qualify, you should make reference to the questionnaire on Revenue Canada’s website (see the link below). You must however repay all the money back into your RRSP within a 15 year time limit, generally by paying 1/15 of the amount withdrawn each year. If you do not make a required payment the amount of the payment will be included in your income and you will be taxed on it.

The money you are withdrawing from your RRSP must have been invested in the plan for at least 90 days before it is withdrawn. You must be a Canadian resident. You must be purchasing the home pursuant to a written agreement of purchase. Neither you nor your spouse can own the home for more than 30 days before the funds are withdrawn from the plan. You must complete the required form at the time of making the withdrawal from your RRSP.

For complete details you should go to the following site here.

INCOME TAX CREDIT FOR FIRST TIME HOME BUYERS

Since January 27, 2009 First time home Buyers are eligible to claim an amount of up to $5,000. This amount can translate into tax savings of up to $750.00. It is designed to provide some tax relief for first time home buyers with respect to the closing costs related to buying a home such as legal fees and expenses.

To be considered a first time home buyer both of the following points must apply to you:

  • You or your spouse or common-law partner acquired a qualifying home.
  • You did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years (first-time home buyer).”

To further explain the definition, “To qualify as a first time homebuyer, the taxpayer’s spouse or common-law partner must not have owned another home in which the taxpayer lived either in the year of purchase or any of the four preceding years. So a taxpayer could qualify for the amount, even though his or her spouse or common-law partner owned a house during the preceding four years, as long as he or she did not live in it while they were married or common-law. So a husband may not qualify as a first time homebuyer but a wife could – or vice versa.”

A qualifying home must be registered in your and/or your spouse’s or common-law partner’s name in accordance with the applicable land registration system, and must be located in Canada. It includes existing homes and homes under construction. The following are considered qualifying homes:

  • single-family houses
  • semi-detached houses
  • townhouses
  • mobile homes
  • condominium units
  • apartments in duplexes, triplexes, fourplexes, or apartment buildings.

A share in a co-operative housing corporation that entitles you to own and gives you an equity interest in a housing unit located in Canada also qualifies. However, a share that only gives you the right to tenancy in the housing unit does not qualify.”

If you are eligible for the disability amount or you are purchasing a home for a related person who is qualified for the disability amount you will qualify for this tax credit without being a first time home buyer as defined above. However, “it must enable the person with the disability to live in a more accessible dwelling or in an environment better suited to their personal needs and care.”

You must intend to occupy the home or you must intend that the related person with a disability occupy the home as a principal place of residence no later than one year after it is acquired.

The claim can be split between you and your spouse or common-law partner, but the combined total cannot exceed $5,000.

When more than one individual is entitled to the amount (for example, when two people jointly buy a home), the total of all amounts claimed cannot exceed $5,000.

For complete information please see the Canada Revenue Agency.