Friday, March 9, 2018 / by Ruth Ballantyne
Three Ways to Save Money for First Time Buyers
As we move into February we begin to think of taxes and how we can minimize what we pay to the government. One way to ensure you are saving more of your money is to contribute to your RRSP. The money that you put into your RRSP not only provides you with a tax break, it can be used to make up some or all of your down payment for a house through the Government’s Home Buyers Plan (HBP).
This is a fantastic way for first time buyers to get into the housing market and use money you would normally pay in taxes to help you buy a house. Depending on your tax bracket if you put your down payment into an RRSP you will get tax relief. What better way to fund a down payment than with money the government sends you in a tax refund.
This plan began in 1992 and the Canadian Real Estate Association has been lobbing the government for many years to enhance this plan. In April the Canadian Real Estate Association (CREA) leaders went to Parliament Hill to lobby MP’s to index the Home Buyers’ Plan (HBP) RRSP withdrawal limit to ensure that it never loses its buying power. In 2008, the CREA lobby was successful in lobbing MP’s to raise the withdrawal limit from $20,000 to $25,000. Last year we also recommended extending the HBP to all homebuyers for two years as a temporary stimulus measure. Over 2,000,000 Canadians have already used the Homebuyers Plan to help their dream of home ownership come true.
Buying a first home is an exciting time. The funds can be used for down payment, legal fees, moving expenses and other things related to buying your first home. The money that you remove from your RRSP must be repaid into the account over 15 years. You must replace a minimum of 1/15th of the money your remove each year or repay the taxes on that same amount. There is no tax charged to take it out.
First time buyers also receive a Land Transfer Tax break/discount on the first $2000 for a resale home. If you are a first-time homebuyer, you may be eligible for a refund of all or part of the tax, depending on the price of the home you choose.
The government also assists first-time home buyers by providing up to $750 in tax relief to help with the purchase of a first home.
So if you are thinking of purchasing a home in 2010 contact me today at firstname.lastname@example.org and I can help you confirm dates, deadlines and the definition of a First Time Buyer to ensure you get the most from it. There are some exceptions where previous homeowners may qualify. It may be away for you, your family and friends to use money you already have, or get more money by way of tax relief to purchase the home you have always wanted.