Monday musings...
A New Week!!
Below is a summary of tax measures proposed in the 2009 Federal Budget which will have an effect on Homebuyers and those planning major renovations.
INCREASED HOME BUYER'S PLAN WITHDRAWAL LIMIT
To encourage home ownership and home construction, the budget proposes to increase the Home Buyer's Plan (HBP) withdrawal limit to $25,000. Currently, the HBP allows you to borrow up to $20,000 tax-free from your RSP to purchase or build your first home. This increase in the HBP withdrawal limit will apply to the 2009 and subsequent calendar years for withdrawals made after January 27, 2009.
NEW FIRST TIME HOMEBUYERS' TAX CREDIT
The budget proposes to introduce a new non-refundable tax credit for first-time homebuyers who acquire a qualifying home after January 27, 2009 (a qualifying home is one that is currently eligible for the Home Buyer's Plan) . First time home buyers will be able to claim a 15% non-refundable tax credit on an amount of $5,000, for a maximum credit of $750 in the year the home is purchased. If a home is purchased jointly, the total credit that may be claimed by all purchasers combined is $750. The credit will also be available for certain acquisitions of a home by or for the benefit of an individual who is eligible for the disability tax credit (DTC).
NEW HOME RENOVATION TAX CREDIT
The 2009 Budget proposes to introduce a temporary Home Renovation Tax Credit (HRTC) to encourage Canadians to invest in home improvements. A non-refundable tax credit of 15% will apply to eligible expenditure over $1000 up to $10,000 resulting in a maximum credit of $1350 ($9000 x 15%) If you are not able to use the entire credit the unused portion may be claimed by your spouse, common law partner or minor child living at home, provided you do not exceed the $1350 maximum credit. This credit will only apply to the 2009 taxation year for eligible expenditure made after January 27, 2009 and before February 1, 2010 and must be supported by receipts. This credit will not apply to home improvement expenses that are based on an agreement entered into before January 28, 2009.
Costs for renovations or alterations of an enduring nature to a qualified principal residence will qualify for the HRTC. The means that if you have both a home and a recreational property that can qualify as a principal residence, you can claim the HRTC for renovation expenses on one, the other or both. Such costs will include the cost of labour and professional services, building materials, equipment rentals and permits. Alterations such as furniture, appliances, audio-visual electronics, routine repairs and maintenance and financing costs associated with a renovation would not qualify for the HRTC.
Below is a summary of tax measures proposed in the 2009 Federal Budget which will have an effect on Homebuyers and those planning major renovations.
INCREASED HOME BUYER'S PLAN WITHDRAWAL LIMIT
To encourage home ownership and home construction, the budget proposes to increase the Home Buyer's Plan (HBP) withdrawal limit to $25,000. Currently, the HBP allows you to borrow up to $20,000 tax-free from your RSP to purchase or build your first home. This increase in the HBP withdrawal limit will apply to the 2009 and subsequent calendar years for withdrawals made after January 27, 2009.
NEW FIRST TIME HOMEBUYERS' TAX CREDIT
The budget proposes to introduce a new non-refundable tax credit for first-time homebuyers who acquire a qualifying home after January 27, 2009 (a qualifying home is one that is currently eligible for the Home Buyer's Plan) . First time home buyers will be able to claim a 15% non-refundable tax credit on an amount of $5,000, for a maximum credit of $750 in the year the home is purchased. If a home is purchased jointly, the total credit that may be claimed by all purchasers combined is $750. The credit will also be available for certain acquisitions of a home by or for the benefit of an individual who is eligible for the disability tax credit (DTC).
NEW HOME RENOVATION TAX CREDIT
The 2009 Budget proposes to introduce a temporary Home Renovation Tax Credit (HRTC) to encourage Canadians to invest in home improvements. A non-refundable tax credit of 15% will apply to eligible expenditure over $1000 up to $10,000 resulting in a maximum credit of $1350 ($9000 x 15%) If you are not able to use the entire credit the unused portion may be claimed by your spouse, common law partner or minor child living at home, provided you do not exceed the $1350 maximum credit. This credit will only apply to the 2009 taxation year for eligible expenditure made after January 27, 2009 and before February 1, 2010 and must be supported by receipts. This credit will not apply to home improvement expenses that are based on an agreement entered into before January 28, 2009.
Costs for renovations or alterations of an enduring nature to a qualified principal residence will qualify for the HRTC. The means that if you have both a home and a recreational property that can qualify as a principal residence, you can claim the HRTC for renovation expenses on one, the other or both. Such costs will include the cost of labour and professional services, building materials, equipment rentals and permits. Alterations such as furniture, appliances, audio-visual electronics, routine repairs and maintenance and financing costs associated with a renovation would not qualify for the HRTC.
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