1: First-time homebuyer's tax credit: A $5,000 tax credit offers up to $750 in tax savings for first-time buyers to help with closing costs on a home purchased after January 27, 2009.
2: Home Buyers' Program: You now can take up to $25,000 out of your RRSPs to buy a first home and pay no taxes, up from $20,000. That’s up to $50,000 for eligible couples.
3: Home Renovation Tax Credit—for everyone. Claim up to a $1,350 tax credit for renovations to your home costing $1,000 to $10,000. The Home Renovation Credit expires February 1, 2010.
4: EcoEnergy Retrofit Program: Get a grant of up to $5,000 for changes to your home that add to its energy efficiency; you can also claim the Home Renovation Tax Credit for these upgrades.
- First-Time Home Buyers’ Tax Credit
The additional costs associated with purchasing a home such as legal fees, disbursements and land transfer tax, can add to the First Time Buyer financial load, over and above the needed downpayment.
To assist first-time home buyers with the costs associated with the purchase of a home, Budget 2009 introduced a First-Time Home Buyers’ Tax Credit – a $5,000 non-refundable income tax credit amount on a qualifying home acquired after January 27, 2009.
For an eligible individual, the credit will provide up to $750 in federal tax relief (15% of expenditures of up to $5,000) starting in 2009.
Tax Credit Available for People Eligible for Disability Tax Credit
The First-Time Home Buyers’ Tax Credit is also available to existing homeowners in respect of a more accessible or functional home purchased by an individual eligible for the Disability Tax Credit (DTC), or for the benefit of a DTC-eligible person who is related to the individual purchasing the home.
- Home Buyers’ Plan Up $25,000
The amount that first-time home buyers can withdraw from an RRSP is now $25,000 from the previous $20,000 to buy or build a first-time home. Eligible couples can now withdraw up to $50,000.
The withdrawal would be tax free if repaid within 15 years with a minimum of 1/15 each year. (See below for more details on how this works)
- Home Renovation Tax Credit:
Those who already own homes will benefit from a temporary Home Renovation Tax Credit (HRTC) of up to $1,350 on home renovation projects between $1,000 and $10,000. The $1,350 tax credit represents 15% of $9,000. Note that this is a short-term stimulus that applies on work performed or goods acquired after Budget Day, January 27, 2009 and before Feb. 1, 2010. It's a non-refundable tax credit, which means it can reduce taxes payable but there is no refund if your taxes are reduced below zero.
The HRTC, however, simply requires homeowners to apply for the tax credit, directly on their income-tax returns. The taxpayer is required to save the appropriate receipts in case of a future audit by Revenue Canada.
As well, contractors will have to produce invoices for jobs such as backyard landscaping or basement refinishing -- work that Finance officials noted is often conducted on a cash basis, with no paperwork produced.
The renovation credit would apply to work done on houses, cottages and condominiums.
The list of eligible expenses includes renovating kitchens, bathrooms or basements; painting; new carpeting or flooring; laying new sod; building additions, decks, or retaining walls; installing furnaces or water heaters; interior and exterior painting; or driveway resurfacing.
Routine maintenance does not qualify. Such things as new furniture, appliances, tools, carpet cleaning and snow removal are excluded.
The tax credits and savings are realized when filing Income Tax Returns for 2009.
- EcoEnergy Retrofit Program
Get a grant of up to $5,000 for changes to your home that add to its energy efficiency; you can also claim the Home Renovation Tax Credit for these upgrades.
For details, Google: EcoEnergy Retrofit. Hyperlink: Office of Energy Efficiency—ecoENERGY Retrofit.
For more on how these proposed savings work, we invite you to contact us.