The New Year brings new tax breaks for homebuyers

The start of the New Year brings with it a number of tax breaks to help make home ownership more affordable for Canadian buyers.  Lower income tax means more disposable income to devote to a home purchase, and the one per cent cut in the GST will provide savings to new home buyers closing their sale after January 1st.   According to an example provided by the Canadian Real Estate Association (CREA), using the sliding GST scale that applies to the cost of new homes, a buyer of a $375,000 house in British Columbia would save $2,738.

When you buy a resale home, while it may not be subject to the GST, you can still save on other transaction-related services – including lawyer’s fees, real estate commissions, home inspections, and surveys.  You’ll also save on home-related expenses that will be incurred long after the transaction is concluded, such as home improvements, or the purchase of furniture and appliances.

What’s more, your tax breaks may not end with federal income tax and the GST (or the harmonized HST in the Maritime provinces).  In addition to federal tax breaks, you may find that you’re also eligible for further benefits at the provincial, or even the municipal level.  Your local Coldwell Banker® sales professional can tell you more about other incentive programs that may be of interest to you.   

For example, if you plan to buy property in Ontario, the provincial government proposes to expand the Land Transfer Tax Refund Program to include first-time homebuyers of resale homes. This measure would be effective for agreements of purchase and sale entered into after December 13, 2007. As a result of this change, first-time homebuyers of resale homes in Ontario would be able to receive a refund from the provincial government of up to $2,000 of the land transfer tax paid.  For more information on this program, including details on how to apply for your refund, go to http://www.rev.gov.on.ca/english/refund/newhome/

In addition to new tax breaks for home buyers, other popular programs are continuing in 2008.  For example, under the federal Home Buyers’ Plan, first time home buyers can borrow up to $20,000 from their RRSP to use in the purchase of their principal residence.  If there’s more than one person involved in a home purchase, a combined maximum of $40,000 can be withdrawn from individual RSPs to apply against the down payment, as long as each purchaser doesn’t exceed the $20,000 individual RRSP withdrawal limit and all the participants are first time buyers.  Plan participants have 15 years to repay their RRSP withdrawal without incurring any tax or withdrawal penalty.