Canada's housing industry is thrilled with the government's new budget, which provides up to $7.8 billion in tax relief and funding for everything from home renovations to housing for low-income seniors. From First Nations housing to first-time buyers' incentives, there's something for almost everyone.
The Conservative government came through on its election promise to help first-time buyers with closing costs such as legal fees and land transfer taxes. A tax credit worth up to $750 will be made available for first-time buyers, as well as existing homeowners who buy a more accessible or functional home and qualify for a Disability Tax Credit.
The government has also increased the amount that first-time buyers can withdraw from their Registered Retirement Savings Plan to buy a home, from $20,000 to $25,000. The popular Home Buyers' Plan was introduced in 1992 but the amount that could be withdrawn tax-free had not changed since then. The Canadian Real Estate Association (CREA) says in a news release that the plan "has not had the same impact and relevance it did 16 years ago, when the original $20,000 limit represented 13.3 per cent of the average home price, versus about 6.5 per cent in 2008."
To stimulate the residential construction industry, there's a new 15 per cent income tax credit for home renovation work performed between January 27, 2008 and February 1, 2010. The credit applies to expenditures exceeding $1,000 but not more than $10,000, and provides up to $1,350 in tax savings.
This credit is "family based" - a family is considered to be an individual and their spouse or common-law partner, who can share the credit.
The budget provides this example of how the credit could work: "Sally and Ed ... decide to replace their windows and improve the insulation in their home in 2009, incurring $10,000 in expenditures. After taking account of the $1,000 minimum threshold, a 15 per cent credit will be available on $9,000 in eligible expenditures, providing tax relief of $1,350." The government expects this program will cost $500 million in 2008-09 and $2.5 billion in 2009-10.
The budget also builds on the existing ecoENERGY Retrofit program, which provides property owners grants of up to $5,000 to offset the cost of making energy-efficiency improvements, such as upgrading insulation or installing a new furnace. Homeowners will be able to take advantage of both this program and the new Home Renovation Tax Credit for eligible work.
For more information on buying or selling real estate in Burlington or Oakville, Ontario, or if you have questions about current market trends, mortgages or interest rate information, please visit me again on my website www.seansells.ca or call me at 905-220-9198 and I'd be glad to answer any questions to accommodate all of your real estate needs.