First Time Buyers Home: Benefits and Mistakes

July 27, 2010

Owning a house for the fist time is a great financial responsibility that requires careful planning and  dedication. Many first time home buyers that come to the real estate market only know that they are looking to buy their first house and do not have a clue about the benefits that have been established by the Canadian government to help first time home buyers fulfill their dreams. If you are thinking about buying your first home then some of the areas that you will need to pay attention to are: RRSP Home Buyer’s Plan, the Municipal Land Transfer Refund, the Land Transfer Tax rebate and the First-Time Homebuyers’ Tax Credit.

RRSP Home Buyer’s Plan

First time home buyers can withdraw up to $25,000 from the RRSPs tax free. If a couple (husband and wife) are buying their first home, then both can withdraw up to $25,000 each to contribute towards the purchase of their new home. The house they intend to buy must be their principal residence to qualify for the benefit and neither of the partners should have lived in a home that either of the parties own in the last five years.

Municipal Land Transfer Refund

Under the act created by the  City of Toronto in 2006 and that was approved by the   Municipal Land Transfer Tax effective February 1, 2008, first time home buyers are entitled to a rebate of up to $3,725.00. This condition is applicable to newly constructed or re-sale residential property.

Land Transfer Tax rebate

First time home buyers are entitled to $2,000 of land transfer tax, once they can demonstrate that they are eligible for the refund. Neither of the parties involved will be entitled to the refund if they own a home in Toronto or any where else in the world.

First-Time Homebuyers’ Tax Credit (HBTC)

If you are considering the possibility of buying your first home then chances are you may qualify for the non-refundable tax credit that is calculated based on calculation between the  lowest income tax for the year multiplied by $5,000.

Common First Time Home Buyers Mistake

Emotional Purchase: First time home buyers can allow their emotions to blind their decision to buy a house, rather then look at the situation objectively. It must be remembered that buying a house is the biggest financial decision that one can make in his or her life and allowing emotions to cloud the process can be costly and stressful.
Home Inspections: When you are buying a house for the first time, it is imperative that you ask for a home inspection to be performed. This will allow you to see what is really under the surface of the nicely painted walls and fancy furniture. Home inspectors are trained professionals that have an eye for detail that most people do not notice even if something may seem obvious.
Dismissing a Realtor: A Realtor is bound by law to conduct legal practices and to represent all parties involved in a fair manner. Some first time home buyers try to dismiss using one to avoid paying the realtor fees that are attached. However, not only can it be a stressful experience when buying a home for the first time, it can also result in very costly mistakes.
Financing: First time home owners should always check to see the financing options that are available to them. The most common mistake that people commit when they buy their first home is to take the fist offer that they get without shopping around. They do not analyze if their interest rates will be fixed or variable and end up paying more than what they bargained for in the long run. Financing will help first time home buyers to see how much they can really afford and not provide a basis on which a budget can be prepared and decisions that should be taken to buy their first home.

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