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Recent Budget Changes and Greater Affordability That Help With Home Ownership

If you are in the market to purchase a home, second home, vacation property, rental or investment property in 2009 it looks to be a great year. Affordability for housing is at an all time high due to extremely low interest rates and house prices. Real estate values have been falling for the last 9 months and look to stabilize throughout the year. In addition the recent budget changes help first time homebuyers with tax incentive programs and downpayment saving programs. New and existing homeowners can also benefit from tax savings with the introduction of a renovation tax incentive program.

As mentioned above it is a fantastic year for first time homebuyers to purchase a property. Homebuyers currently need a minimum 5% downpayment to purchase a home and saving for this downpayment has been made easier. The recent budget now allows a first time homebuyer to withdraw up to $25,000 from their RRSP under the first time homebuyers plan. This was increased from the previous maximum limit of $20,000. Also available to help any homebuyer with saving for the downpayment is a Tax Free Savings Account (TFSA). As of January 1, 2009 you can deposit your savings into a TFSA where any interest or dividend income and capital gains can be earned tax free. You can deposit up to maximum of $5,000 per year to your TFSA account and withdraw the funds anytime with no tax payments required. To find out more about these accounts please visit the following website: or contact your financial institution.

Whether you are a first time home buyer or buying your 10th property and have not had the ability to save for the downpayment, the following are two options available to you if you have excellent credit:

Option 1) Borrowing the downpayment through your own means. In this scenario you would borrow the 5% downpayment from a financial institution and then be eligible for the best mortgage interest rates. If you are having difficulties getting an unsecured loan from a bank or find dealing with two separate loans and payments to be confusing, option 2 is available for you.

Option 2) Cash Back Mortgage programs offered through the lenders where along with the mortgage, the downpayment is lent to you with one easy application process. You only have to deal with one payment. The current best 5 year fixed rate with 5% cash back is 5.79%.

Another incentive provided to first time homebuyers is the first time homebuyerís tax credit. This program gives a tax credit of 15% on eligible closing cost expenses such as legal fees, land transfer taxes, appraisals fees, home inspection fees, moving expenses, etc. You can claim a maximum $5,000 of qualified expenses to receive the full $750 tax credit. For further information please visit the following website: or contact an accountant or tax professional.

The budget has also included for 2009 a home renovation tax credit to benefit all homeowners. This program gives the homeowner a 15% tax credit for any qualified renovation expenses in excess of $1,000 to a maximum of $10,000. You have until February 1, 2010 to make your qualified expenses for a maximum tax credit of $1,350. Qualified expenses include renovating a kitchen, bathroom or basement, new flooring such as hardwood carpet or tile, building a new addition, deck, fence or retaining wall, new furnace or water heater, Painting the interior or exterior of your house, resurfacing a driveway, laying new sod, etc. Expenses that do not qualify are the purchase of furniture or appliances, purchase of any tools, carpet cleaning, any maintence projects such as furnace cleaning, lawn care, snow removal, etc. Also to note only personal use properties can qualify such as your primary residence or vacation property. Therefore renovations done to rental or investment properties do not qualify for this tax incentive. To illustrate an example on how this works: you have made qualified renovation expenses of $7,000. That means you get a tax credit of $7,000 - $1,000 = $6,000 X 15% = $900. For further information please visit the following website: or contact an accountant or tax professional. If you do not have the means to pay for the renovations yourself you can always take advantage of todayís low interest rates and use any excess equity value up to 95% and refinance your property to complete your renovation projects. Also if you are purchasing a new home that may need some renovations the purchase plus improvements program can help you finance the renovations. Please feel free to contact us anytime to inquire about your options.

With housing that has become more affordable and the above savings, tax and loan incentives purchasing or renovating a home has become easier and cheaper than the recent past. If you have any questions or would like to apply today please contact Betty at 403-532-3927, e-mail, Kevin at 403-589-3021, or at our website:

Also please tell anyone you know that maybe looking to purchase, refinancing or early renewing their mortgage as it may give you an opportunity at a chance to receive a $1,000 gift certificate of your choice. Click Here or open the attachment to find out further details.

Please click here if you would like to make any comments about the current or past newsletters as we appreciate any feedback. Also watch for our new and improved website in Spring of 2009.