Created: May 29, 2009

2009 Tax Breaks for Home Buyers

- The new renovation tax credit will save up to $1,350 in federal taxes with a credit of 15% on renovation expenses of over $1,000 including PST and GST on taxpayers' homes. This covers labor, materials,professional fees and related costs for renovations up to January 31st, 2010. It covers internal and external renovations and repairs including painting, light and fan fixtures: flooring including carpeting; building additions including garages, sheds and fencing; roofing driveways and paving; windows including covering attached to window frames; new sod and landscaping ; in-ground and above-ground pools; security systems

and associated costs for permits, professional fees, equipment rentals and "incidental costs". It does not cover furniture, appliances, and electronics, tools, cleaning, maintenance contracts and financing costs.

- FIRST TIME HOME BUYERS. Who are defined as not having owned a home in the 4 prior years are getting 2 breaks. There will be a "First-Time Buyer's Credit" of $5,000 saving $750 at the 15% federal rate on the purchase of a home after January 27th, 2009. Only one credit maybe claimed per spousal couple.

 Secondly,after January 27th, 2009, the Home Buyers Plan (HSP) maximum RRSP tax-free withdrawal for first-time buyers in rising from $20,000 to $25,000 or $50,000 cash for a couple. Pre-existing breaks include a $2,000 rebate of Ontario Land Transfer Tax on the purchase of both new homes and resale homes. A fourth break is a $3,725 exemption on the new Toronto Land Transfer Tax Started on February 1st, 2008. First-time buyers will pay only 2% on the cost over $400,000. With low interest rates, there will be a LOT of first-time buyersin 2009