Benefits for a First-Time Home Buyer The more you know about why you should buy a home, the less intimidating the whole process is.. so here are some very good reasons to purchase your first home: - Pride of ownership: Home ownership gives you and your family a sense of stability and security. It's making an investment in your future.
- Appreciation: Although real estate moves in cycles, sometimes up, sometimes down, over the years, real estate has consistently appreciated. Many people view their home investment as a hedge against inflation.
- Mortgage reduction builds equity: Each month, part of your monthly payment is applied to the principal balance of your loan, which reduces your obligation.
- Mortgage interest and property tax deductions: Home ownership is a superb tax shelter and our tax rates favor homeowners.
So what are you next steps? The Canada and Mortgage Housing Corporation has an excellent online guide, which includes examples and worksheets, that takes you through the steps to buying your first home. Click on the link below: howrealtorshelp.ca also has an excellent step-by-step online guide: 1. Make sure you are ready to buy 2. Figure out how much you can afford 3. Decide what you want to buy 4. Find a REALTOR who is right for you 5. See what's out there 6. Sell your current home (if you have one) 7. Add a lawyer to your team 8. Make an offer 9. Arrange a mortgage 10. Find a home inspector 11. Close the deal 12. Move in! Finding a good real estate agent / broker is essential to enjoying a painless real estate transaction. The best agent for you is an experienced professional who will listen to you, conduct herself in an ethical manner and knows your market. All Realtors® are licensed to sell real estate as an agent or a broker but not all real estate agents are Realtors®. Only Realtors® can display the Realtor® logo. Realtors® belong to the National Association of Realtors and pledge to follow the Code of Ethics, a comprehensive list containing 17 articles and underlying standards of practice, which establish levels of conduct that are higher than ordinary business practices or those required by law. Less than half of all licensees are Realtors®.
The Government of Canada and the Ontario government have established two popular programs to help first time home buyers. The programs are the Land Transfer Tax rebate and the RRSP Home Buyer's Plan. LAND TRANSFER TAX REBATE - Allows first time home buyers to get a GST rebate on new and, subject to the proposal being passed by Legislature, resale homes.
- The maximum refund is $2,000 Cdn.
- For more information see article below and visit the Ontario Ministry of Revenue or see the overview.
RRSP HOME BUYER'S PLAN (HBP) - Allows first time home buyers to withdraw amounts from a Registered Retirement Savings Plan (RRSP) to purchase or build a home without having to pay tax on the withdrawal
- The amount was previously up to $20,000 until the Budget 2009 proposed to increase the HBP withdrawal limit to $25,000
- Money can be withdrawn from your RRSP provided it has been in your RRSP for at least 90 days
- Money withdrawn must be paid back to your RRSP within 15 years and the repayment period starts the second year following the year the first withdrawals were made
- If you do not pay the full amount back to your RRSP within 15 years, the amount outstanding will be subject to tax when you file your income tax
- For example, in October 2009 a first time buyer withdraws $24,000 from his or her RRSP to finance the purchase of a home. Their first annual repayment of $1,600 ($24,000 divided by 15 years) is due by December 31, 2011.
- For more information visit Canada Revenue Agency.
BUYERS GET A TAX CREDIT - For 2009 and subsequent years, the budget also introduced a new non-refundable tax credit to help first time home buyers with some of their closing costs. This Home Buyer Tax Credit (HBTC) will provide up to $750 in tax relief on the purchase of a first home that closed after January 27th, 2009. The HBTC is calculated by multiplying the lowest personal income tax rate for the year (15% in 2009) by $5,000. For 2009, the credit will be $750.
|