This year's federal budget revealed new programs that may benefit anyone planning to buy or renovate a home.
Help for first time homebuyers
First-time home buyers who purchase a qualifying home after January 27, 2009 will be able to claim a new 15% non-refundable tax credit based on an amount of $5,000, for a maximum credit of $750. A qualifying home is one that is currently eligible for the Home Buyers' Plan. The First-Time Home Buyers' Tax Credit can be claimed by either the purchaser or by his or her spouse. Any unused portion of the credit can be claimed by the individual's spouse.
First-time home buyers will also be able to take advantage of an increase in the Home Buyers' Plan withdrawal limit from $20,000 to $25,000. The increase applies to 2009 and subsequent calendar years for withdrawals made after January 27, 2009.
Home Renovation Tax Credit available to all homeowners
The 2009 budget includes a temporary Home Renovation Tax Credit (HRTC) to encourage Canadians to invest in home improvements. All homeowners, including those who have just purchased a new or resale home can take advantage of the HRTC.
A 15% non-refundable tax credit will apply to eligible expenses over $1,000 and up to $10,000 for a maximum credit of $1,350 [($10,000 - $1,000) x 15%]. The credit will only apply to the 2009 taxation year for eligible expenditures made after January 27, 2009 and before February 10, 2010. Costs must be detailed on receipts.
Eligible improvements must be of an enduring nature and would include many of the ones commonly done by new home owners such as:
- Renovating a kitchen, bathroom, or basement
- New carpet or hardwood floors
- Building a deck, fence or retaining wall
- A new furnace or water heater
- Painting the home's interior or exterior
- Laying new sod
Additional information for clients
The Canada Revenue Agency (CRA) website provides additional information about programs in this year's federal budget:
Stacy Johnson, AICB
RBC Motgage Specialist
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