Home Buyers’ Plan

1. What is the Home Buyers’ Plan?
2. What is the current maximum amount that can be withdrawn under the HBP
   Routing Number VIRGINIA COMMERCE BANK

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3. What is the new maximum amount announced in the 2009 Budget?
4. If I withdrew up to $20,000 from my RRSP after December 31, 2008, and before January 28, 2009, can I withdraw additional funds from my RRSP after January 27, 2009?
5. Is the HBP connected to the new Home Buyers Tax Credit (HBTC)?
6. Where can I find more information on the HBP?

The Home Buyers’ Plan (HBP) is a program that allows you to withdraw funds from your Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home for yourself or for a related person with a disability.

2. What is the current maximum amount that can be withdrawn under the HBP?

Currently, the maximum amount that an individual can withdraw in a calendar year from an RRSP to purchase or build a qualifying home without having to pay tax on the withdrawal is $20,000.

3. What is the new maximum amount announced in the 2009 Budget?

For 2009 and subsequent years, for withdrawals made after January 27, 2009, the budget proposes to increase the maximum amount to $25,000.

4. If I withdrew up to $20,000 from my RRSP after December 31, 2008, and before January 28, 2009, can I withdraw additional funds from my RRSP after January 27, 2009?

Yes. You can withdraw additional funds after January 27, 2009, as long as the total of all your withdrawals in 2009 does not exceed the new maximum amount of $25,000. However, under existing requirements neither you nor your spouse or common-law partner can own the qualifying home for more than 30 days before making the final withdrawal in 2009.

5. Is the HBP connected to the new Home Buyers Tax Credit (HBTC)?

No. Although some of the eligibility conditions for the HBP and the HBTC are similar, they are not connected. Participation in the HBP does not affect an individual’s eligibility for the HBTC.

6. Where can I find more information on the HBP?

For more information, please consult RC4135, Home Buyers’ Plan. Taxpayers are encouraged to check our Web site often – all new forms, policies, and guidelines will be posted here as they become available.

Documents are also available immediately at Department of Finance’s Budget 2009.

Not necessarily ‘new’ news, but a great piece of information never the less.

What is the Home Buyers’ Tax Credit (HBTC)?

For 2009 and subsequent years, the budget proposes to introduce a new non-refundable tax credit, based on an amount of $5,000, for certain home buyers that acquire a qualifying home after January 27, 2009 (i.e., closing after this date).

2. How is the new HBTC calculated?

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.

3. Who is eligible for the HBTC?

An individual will qualify for the HBTC if:

• they acquire a qualifying home; and
• neither the individual nor the individual’s spouse or common-law partner owned and lived in another home in the year of purchase or any of the four preceding years.

If you are a person with a disability or are buying a house for a related person with a disability, you do not have to be a first time home buyer.  However, the home must be acquired to enable the person with a disability to live in a more accessible dwelling or in an environment better suited to the personal needs and care of that person.

4. What is a qualifying home?

A qualifying home is a housing unit located in Canada. This includes existing homes and those being constructed. Single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, and apartments in duplexes, triplexes, fourplexes, or apartment buildings, all qualify. A share in a co-operative housing corporation that entitles you to possess and gives you an equity interest in a housing unit located in Canada also qualifies. However, a share that only provides you with a right to tenancy in the housing unit does not qualify.

As well, you or the related person with a disability must intend to occupy the home as a principal place of residence no later than one year after buying it.

5. If I buy a house, can my spouse or common-law partner claim the HBTC?

Either one of you can claim the credit or you can share the credit.  However, the total of both your claims cannot exceed $750.

6. My friend and I intend to purchase a home, and we both meet the conditions for the HBTC. Can we both claim the credit?

Either one of you can claim the credit or you can share the credit.  However, the total of both your claims cannot exceed $750.

7. Do I have to register the acquisition of the home under the applicable land registration system?

Yes.  The individual’s interest in the home must be registered in accordance with the applicable land registration system.

8. Who is considered a person with a disability for purposes of the HBTC?

For the purposes of the HBTC, an individual eligible for the Disability Tax Credit (DTC) is one for whom an amount can be claimed under the DTC for the year in which an agreement to acquire the home is entered into, or could be claimed if costs for an attendant care or care in a nursing home were not claimed for the [Medical Expense Tax Credit].

9. How will I claim the HBTC?

Beginning with the 2009 personal income tax return, a new line will be incorporated to allow you to claim the credit.

10. Do I have to submit any supporting documents with my income tax return?

No. However, you must ensure that this information is available, should it be requested by the CRA.

11. Is the HBTC connected to the existing Home Buyer’s Plan?

No. Although some of the eligibility conditions for the HBTC and the Home Buyer’s Plan are similar, they are not connected. Your eligibility for the HBTC will not change whether or not you also participate in the Home Buyer’s Plan.

12. Where can I get more information about the new HBTC?

The CRA encourages taxpayers to check our Web site often – all new forms, policies, and guidelines will be posted here as they become available.

Documents are also available immediately at Department of Finance’s Budget 2009 for details.

The Canadian Association of Accredited Mortgage Professionals (CAAMP) has just released a report on the state of the mortgage market, including results from a consumer survey plus some forecasts.

You can download the report here, and check back over the next couple of days for my commentary.

We had a record turnout at the Millionaire Real Estate Investor seminar in Milton tonight!! Here are some comments from a couple of the attendees . . .

No, wait, that’s not it; that’s something completely different.

I wanted to write once more about the changes that are going on in the market, right before our very eyes. In our office, there were an average of 18 couple through the open houses this past weekend – that is huge. Several agents sold properties with multiple offers, and went over list price – that is huge. Numerous buyers have been on the phone and email the last 3 days, saying that now it’s time for them to look at buying.

What does all this mean?

Well, it sure looks like the reliable signs that say the market is turning. Now, sure, I’ve read some of the whiney posts by people on The Star’s bulletin boards about how the optimism is just lies because of how many more people are going to lose their jobs. And I’ve heard those prognostications too. But here’s where it gets interesting . . .

Rent for a small house = $1300 per month / Purchase price of $195,000.

Mortgage Pymt = $805
Condo Fees         = $240
Taxes                     = $175

TOTAL                   = $1,280

Well, look at that – it’s actually cheaper to buy than it is to pay rent! And, people have to live somewhere, so why not pay off your own mortgage instead of someone else’s?

Oh, the naysayers moan, those numbers aren’t real. What about the downpayment? Well, what about it; for a slightly higher mortgage rate, you can get 97% or 100% financing and still be paying off your own mortgage instead of someone else’s.

Well, I can’t buy – I’m stuck in a lease for the next 9 months! Guess what – I have a solution for that too! Give me a call to set a time for a Buyer Consultation and we can go over all the details and get you into a home before you miss out on one of the best buying markets in history!