Finance Minister Jim Flaherty delivered Canada's 2009 federal budget earlier today on January 27, 2009. Members of the KPMG National Tax Centre attended the budget lock-up in Ottawa and have prepared a new edition of TaxNewsFlash-Canada summarizing the announced tax changes. Click on this link for an overall summary of the Federal Budget http://www.kpmg.ca/en/services/tax/tnf/taxnewsflashcanada.html
Tax credits for home buyers and home owners
Home renovation tax credit
Under a new temporary renovation tax credit, home owners can claim a 15 percent non-refundable tax credit for eligible expenditures over $1,000 but not more than $10,000, for a maximum credit of $1,350 ($9,000 × 15%). The credit is available for eligible costs of work performed or goods acquired after January 27, 2009 and before February 1, 2010 (unless the expenditure is made under an agreement in place on or before January 27, 2009).
Family members (spouses or common-law partners and their children under 18) are subject to a single limit based on their pooled expenditures. The credit is only available for a dwelling that is eligible to be the family's principal residence or that of one or more of their other family members.
Expenditures will qualify for the credit if they are incurred in relation to a renovation or alteration of an eligible dwelling, provided the renovation is of an enduring nature and is integral to the dwelling. Examples include new furnaces, windows and decks. Eligible expenditures include labour costs, professional fees, building materials, fixtures, equipment rentals and permits.
First-time home buyers' credit
First-time home buyers who acquire a qualifying home after January 27, 2009 may be entitled to claim a new non-refundable tax credit of $5,000 and worth up to $750 ($5,000 × 15%).
To qualify, neither the individual nor his or her spouse or common-law partner can have owned and lived in another home in the calendar year of the new home purchase or in any of the four preceding calendar years. The credit can be claimed by either the purchaser or by his or her spouse or common-law partner.
The credit will also be available for certain home purchases by or for the benefit of an individual eligible for the disability tax credit.
Home Buyers' Plan threshold increased
The budget increases the amount that first-time home buyers can withdraw tax-free from a Registered Retirement Savings Plan (RRSP) to purchase or build a new home to $25,000 (up from $20,000). The new limit applies to withdrawals made after January 27, 2009.
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