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Buying your first property can and should be an exciting and enjoyable experience. There are many perks to being a First Time Home Buyer (FTHB) in British Columbia and it is important that the professionals you work with help you to take advantage of these benefits. There are three different advantages I am going to touch on in this blog, those being FTHB property transfer tax, FTHB RRSP funds and a FTHB tax credit. The links provided below each section are resources for you to do your homework to make sure you get a full and clear understanding of each one.
Let’s start with the huge tax break advantage that FTHBs can get when they purchase their first property. As a FTHB, all the taxes and fees and bills can be overwhelming at times and the costs can really start to add up. The B.C. government has taken measures to relieve one of the major costs that affect all home purchasers in B.C.; the provincial government has exempted FTHBs from having to pay property transfer tax (PTT) on any principal residence purchased UP TO $475,000. Now, if you go over that magic number, you pay PTT on the whole purchase price, but anything below it is a safe bet. Having this knowledge can play a crucial factor in determining what exactly you are looking for in that initial purchase. For more detailed information and a breakdown of what the PTT cost could be on your purchase, click here.
The next perk available to FTHBs is called the Home Buyer’s Plan; what this plan allows you to do is to pull up to $25,000 out of your RRSP funds per calendar year to help with the purchase of your principal residence. Now, of course, there are all sorts of terms and conditions surrounding this type of withdrawal and repayment of it etc, but for those who need a little boost with a down payment or simply want to pull from different resources to make their first purchase, the Home Buyer’s Plan offers a great way to diversify the source of your down payment funding. Additional information and answers can be found here.
Lastly, as a nice little bonus at the end of all the big transactions, as a FTHB you may qualify for what is called the Home Buyer’s Tax Credit. Basically, this credit is granted to all FTHBs and even some non-FTHBs (if they meet all the criteria) and it is a non-refundable tax credit that is calculated by multiplying the lowest personal income tax rate for the year, for instance 15% in 2009, by $5,000, which in this example, would result in a tax credit of $750. If you would like a further breakdown and answers to frequently asked questions, click here.
With this knowledge in hand, it is crucial that you sit down and chat with your REALTOR®, mortgage broker and accountant to figure out what the best strategy is for you to get the most out of your first purchase into the real estate world.
If you have further questions about these three benefits to being a FTHB or anything else real estate related, please call me today and we can get you the answers you need to make a clear and informed decision.
Always here to help!