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PETER DOLEZAL: B.C. bonus program for the first-time homebuyer
Despite the federal government’s recent tightening of mortgage lending rules, which have significantly impacted first-time home buyers, there remains a major B.C. program of tremendous value to potential first-time purchasers — but only if they complete a new-home purchase before April 1, 2013, at which time this one-year program terminates.
The $10,000 First-Time New Home Buyers’ bonus is available to any B.C. resident who a) is a first-time purchaser; b) earns less than $150,000 annually; and c) purchases a newly-constructed condominium, townhome or single family dwelling valued at $200,000 or more. The new home must be occupied by the purchaser before April, 2013.
While this program can be equivalent to the entire five per cent down payment on a $200,000 condo, it is not widely understood. As a result, many potential first-time buyers have failed to take advantage of this unique opportunity.
Parents hoping to become empty nesters sooner rather than later, may want to consider lending their young adult $10,000 toward a down payment — perhaps on the understanding the loaned amount will be repaid. This may also be an opportune time for grandparents who wish to assist the younger generation in their family in becoming homeowners. If down payment assistance is possible, much greater joy is experienced by both the grandparent and the grandchild when the benefit of the gift is now, rather than from an estate.
This program presupposes of course, that the first-time home buyer meets all the usual qualification requirements. For those who do qualify, this truly is a not-to-be-missed $10,000 windfall — especially since it is tax-exempt.
Remember too, as well as benefitting from this bonus, the first-time home buyer is also eligible for other one-time incentives. To fund the purchase and furnishings, each person can borrow up to $25,000 interest-free from their RRSP, subject only to the funds being repaid to the RRSP over the subsequent 15 years.
The federal government also offers first-time home buyers a $750 tax credit in the year of purchase. Both Federal and Provincial governments also offer an HST rebate of five per cent on newly-constructed homes of up to $850,000. Also in B.C., the first-time buyer is fully exempt from the property purchase tax (one per cent on first $200,000, plus two per cent on any balance).
When a B.C. first-time buyer takes into account the availability of all these government programs designed to assist with that important first-home purchase, along with record-low interest rates and falling condominium prices, that dream of home-ownership may not be as remote as previously thought.
The $10,000 bonus program for first-time buyers of newly-built residences is the single greatest element of all these available incentives. But it disappears as of April 1, 2013. If seriously considering that first-home purchase, you have little time to waste!
A retired corporate executive, enjoying post-retirement as a financial consultant, Peter Dolezal is the author of three books. His most recent, The SMART CANADIAN WEALTH-BUILDER, is now available at Tanner’s Books, and in other bookstores.