First Time Home Buyer Incentive

Budget 2019 Introduces First-Time Home Buyer Incentive

To help make homeownership more affordable for first-time home buyers, Budget 2019 introduces the First-Time Home Buyer Incentive.

  • The Incentive would allow eligible first-time home buyers who have the minimum down payment for an insured mortgage to apply to finance a portion of their home purchase through a shared equity mortgage with Canada Mortgage and Housing Corporation (CMHC).
  • It is expected that approximately 100,000 first-time home buyers would be able to benefit from the Incentive over the next three years.
  • Since no ongoing payments would be required with the Incentive, Canadian families would have lower monthly mortgage payments. For example, if a borrower purchases a new $400,000 home with a 5 per cent down payment and a 10 per cent CMHC shared equity mortgage ($40,000), the borrower’s total mortgage size would be reduced from $380,000 to $340,000, reducing the borrower’s monthly mortgage costs by as much as $228 per month. Terms and conditions for the First-Time Home Buyer Incentive would be released by CMHC.
  • CMHC would offer qualified first-time home buyers a 10 per cent shared equity mortgage for a newly constructed home or a 5 per cent shared equity mortgage for an existing home. This larger shared equity mortgage for newly constructed homes could help encourage the home construction needed to address some of the housing supply shortages in Canada, particularly in our largest cities.
  • The First-Time Home Buyer Incentive would include eligibility criteria to ensure that the program helps those with legitimate needs while ensuring that participants are able to afford the homes they purchase. The Incentive would be available to first-time home buyers with household incomes under $120,000 per year. At the same time, participants’ insured mortgage and the Incentive amount cannot be greater than four times the participants’ annual household incomes.

Budget 2019 also proposes to increase the Home Buyers’ Plan withdrawal limit from $25,000 to $35,000, providing first-time home buyers with greater access to their Registered Retirement Savings Plan savings to buy a home.

Find more useful tips at www.canada.ca/healthy-home
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Accredited Mortgage Professional Squamish

Sold a home? Know your tax obligations

If you’ve recently sold a home, there are some things you need to know at this time of year.
When you sell your own home (or principal residence) you usually don’t have to pay tax on any profit from the sale. But what you might not know is that even if you are entitled to the principal residence exemption, you need to report the sale on your income tax and benefit return. This became mandatory in 2016.
It is also important to remember that on your tax return, you need to include income from property sales other than your principal residence. For example, if you sell a property you bought with the intention of re-selling it and you make a profit, your profit is taxable. If you bought a home to renovate and re-sell, or bought a pre-construction condo unit to re-sell, your profit is also taxable. In the case of the sale of a secondary home, such as a cottage or a rental property, there are also tax implications. In some situations, this profit is considered business income; in other situations, it is considered to be a capital gain. There may also be GST/HST implications.
In recent years, the Canada Revenue Agency has increasingly been identifying cases where taxpayers did not report their income from real estate transactions. The penalties and interest associated with unreported real estate sales can be substantial, so make sure you get some advice from a trusted source on how to report correctly if you are unsure.
If you didn’t fully declare this income on a past tax return, the Voluntary Disclosures Program at the Canada Revenue Agency may give you a second chance to correct your tax affairs. Find out more at canada.ca/taxes-buy-real-estate-to-sell-for-profit.
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