We often mention all the expenses and unforeseen things that can happen when buying a first home , but it is also important to remember the advantages.
Build a heritage. Do not have to deal with a landlord who is quick to cash checks, but very slow when it comes to repairing plumbing. Have the right to throw a wall down to make a double room. In short, be free and master at home!
Beyond these considerations, did you know that there are also tax benefits associated with the purchase of a property?
Home Buyers’ Plan (HBP)
With this federal program, you can borrow up to $ 25,000 from your RRSPs without paying taxes. Since this is a loan, you will have to start repaying the money from the second year after the withdrawal.
For couples, two eligible spouses can participate in the HBP and withdraw up to $ 25,000 each. The amount is not transferable from one spouse to another. In the case of reconstituted couples, it is also possible for one spouse to qualify while the other is not.
You will then have 15 years to return the full amount of 1/15 per year. If for a given year, the minimum amount is not refunded, you will be taxed on it in the following fiscal year.
Note that an amount designated as a refund to your RRSP can not be deducted on your tax return. As a result, it has no impact on the RRSP deduction limit. However, repayments can be directed to your PRPPs (Pooled Registered Pension Plan) or DBP (Specified Pension Plan).
How to qualify for the HBP
You are not eligible if you lived on a property that you (or your spouse) owned in the previous four years. Specifically, the period runs from 1 st January of the fourth year before the year of withdrawal up to 31 days before the withdrawal.
For example, if the withdrawal takes place May 31, 2018, the period will be that of 1 st January 2014 to 30 April 2018. This means that even if you already owned, you may participate in the HBP if you qualify eligibility.
A written agreement for the construction or acquisition of a home must also have been made. You must intend to use the property as a principal residence in the first year after finalizing the purchase or construction.
For housing to be eligible, it must be purchased or built before 1 st October of the year following the withdrawals. Under certain conditions, it is possible to obtain an extension.
Note that different conditions apply if you are a disabled person or if you help a person with a disability who is related to you. Visit the federal government website or ask your mortgage broker for more information.
Finally, it is possible to participate in the HBP more than once in a lifetime. This, however, requires that you complete the usual conditions, in addition to having a RAP zero balance at 1 st January of the year of the new withdrawal.
Home First Tax Credit (CIAPH)
You must meet the same criteria as the HBP for this non-refundable tax credit of $ 5,000. After the application of the non-refundable tax credit rates, this represents a tax break of up to $ 750. It is not mandatory to participate in the HBP to access it.
In any case, you can count on the advice of a mortgage broker Multi-Prêts to guide you in your projects.