Lawyer can advise about savings at your disposal

Q: We have been married for four years and finally saved sufficient money for the down payment on a new condo.


On July 10, 2006, we purchased our first home from a builder. Our closing is March 2008. Do we qualify for the six or seven per cent Goods and Service Tax (GST) Housing Rebate?



A: Welcome to the world of home ownership! Many young couples are kept away from it because of the initial down payment. Salaries of young couples go quickly for paying student loans, honeymoons, rent deposits, furnishing their first apartment and, of course, enjoying each other’s company. Children are usually not in the picture, as recent statistics show many newlyweds wait until they are in their late 20s when both have established their careers. For most, buying a home requires dual incomes to save and qualify for a new home, particularly in the Greater Toronto Area. There are several programs available for first-time homebuyers that might be useful to you.

Some things to remember:

• Lower GST: New homes purchased after July 1, are subject to the lower 6% GST. Purchasers of new homes qualify for the GST housing rebate. Check your agreement or with your lawyer if GST is included or excluded in the purchase price. Generally, most new home builders include the GST in the purchase price. In this instance, the builder absorbs the GST cost but in turn the purchaser must assign the GST rebate to them on closing. Therefore, do not expect a rebate on closing. Communicate with your real-estate lawyer and they will make your purchase as smooth as can be.

• Those Dreaded Extra Fees: Some new home buyers are ill-prepared for closing cost such as land-transfer tax, lawyer’s fees and mortgage cost, and are juggling funds like a circus performer on closing day to complete the house purchase. A guideline to follow is to set aside approximately two to three per cent of the house purchase price for closing cost.

• First-time buyers: You may qualify for up to a $2,000 reduction of land-transfer tax. However, it must be a new home by a builder registered with Tarion, and the buyer must not have owned a home.

• RRSPs: It isn’t too late for you to use your Registered Retirement Savings Plan (RRSP) for the down payment on your home purchase. You may qualify to withdraw up to $20,000 each with no tax consequences. No interest is charged on the withdrawals, and repayments do not begin until the second year after withdrawal and completed over a 15-year period.

Good luck!

Henry Choo Chong, CGA provides accounting and tax services to individuals and businesses in the GTA.

He can be reached at 416-590-1728, ext. 304. Any questions to Money Matters should be e-mailed to