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RRSP and the First-Time Home Buyers

Can we withdraw the maximum $20,000 under the Home Buyer’s Plan?

Q. Over the past four years, my wife and I have contributed to our RRSPs. Soon, we plan to purchase our first home. Is this a good time to buy or should we wait another year or two? Can we withdraw the maximum $20,000 under the Home Buyer’s Plan?
– Sondeep

A. The Canadian real estate market continues to show sale and price declines. Although most experts do not expect a U.S.-style meltdown, a significant price reduction is expected. Regardless of which province in that you live, real estate agents advise sellers “realistic pricing is key to selling your home.” If you plan to live in the home, real estate will always be a good investment.

Our federal and provincial government has made several initiatives to stimulate the economy and the housing sector. Many recent changes in the federal budget are excellent incentives for all homeowners and first-time buyers.

First-Time Home Buyers:

• New-increase! The RRSP Home Buyers Plan withdrawal limits per individual have increased to $25,000 from $20,000, effective Jan. 27, 2009.

• New-tax credit! After Jan. 27, 2009, homebuyers that have not owned a home in the current year or four preceding years may qualify for a $5,000 non-refundable tax credit.

Existing Homeowners:

• New-Renovations! Families that undertake renovations or alterations between Jan. 27, 2009 and Feb. 1, 2010 to their principal residence may qualify for a 15 per cent non-refundable tax credit. Cost of renovations must be greater than $1,000 and up to $10,000.

• New-Ontario Senior Homeowners’ Property Tax Grant! Senior homeowners can apply for $250 grant in 2009 and $500 in 2010 when filing their current income tax return.

These are giveaways, check with your tax adviser/accountant.

– Reach Henry Choo Chong, CGA, at choochonghcga@yahoo.ca or 416-489-7800, ext. 227.

 
 
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