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Questions And Answers About The Home Buying Program (HBP) ( part 2 )
13. I'm on the CSST permanently; would it be advantageous to take advantage of an RRSP loan
under the HBP? No, because CSST income is not taxable, it would be impossible to have a
tax return if you did not pay any.
14. I earn $22,000 per year and have two children in my charge, would it be advantageous for me
to make an RRSP loan in order to get a considerable tax return? No, because with the two
children to your office, the tax previously paid will be reimbursed almost in full by year-end,
there would be no other tax saving.
15. I buy a new property, can I use the HBP? Yes
16. I live in Canada; can I buy a property in the United States and use the HBP for my down
payment? No, the property must be located in Canada.
17. I do not intend to go live in the property that I am about to buy, can I use the HBP?
No, there must be intent to move to the property to be eligible for the HBP.
18. I am a tenant, can I buy the building where I live using my RRSP? Yes
19. I take my RRSP under the HBP to buy my first home, do I have to take that money specifically
as down payment on the purchase? No, the withdrawal of money from the RRSP can be used
to pay other expenses related to the purchase of the new house. (Legal fees, furniture, etc)
20. I made a RRSP loan on the 1st
of February, what is the earliest date that I can notarized?
60 days after the date of purchase: March 4th 2009
21. After notarized, what is the deadline to withdraw my RRSP under the HBP? 30 days after the
date of signing of the sale
22. I make a withdrawal from my RRSP under the HBP, what is the maximum date to notarize?
October 1st of the following year
23. Can I defer my RRSP deduction on my later years? Yes
24. How much do I have to repay yrarly to my RRSP if I make a withdrawal from my RRSP under
the HBP? A fifteenth (1 / 15) of the amount withdrawn.
25. If I sell my property, do I have to reimburse my RRSP immediately? No
26. I took advantage of the HBP to purchase my property. Sold it 5 years ago. And I have not
owned a home; I lived in, for 5 years. Can I purchase a principal residence and use the HBP?
Yes, but you need refund all the withdrawn to your RRSP under the first HBP before the 1st
of January of the year when the 2nd HBP will be done.
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Questions And Answers About The Home Buying Program (HBP)
The HBP permits an individual and spouse, if any, to use his RRSP to buy a house and pay the related expenses without income tax withholding; provided they return the money obtained in his RRSP over a period of 15 years.
1. I own my home and I buy another property: do I qualify for the program? No
2. I own my home and my new partner lives with me for 1 year: can I use the HBP if we decide to buy a new property? Theoretically not, against, if separated for more than 3 months (change
of address) on non-owner spouse could.
3. I own two rental properties and I do not live there: I can use the HBP if I buy a home now, to go live in? Yes
4. What is the maximum date of purchase RRSP in the current year, to deduct the tax year just
ended? 1st of March
5. I have my RRSP with the Quebec Workers Fund (FTQ): Can I withdraw under the HBP? Yes, but you must prove that the FTQ RRSP are the last to be removed and there is no other
RRSP placed elsewhere.
6. Buying a mobile home on leased land, can I qualify? Yes
7. I have $30000 in RRSPs, can withdraw all of it under the HBP? No, because the maximum
per taxpayer withdrawal under the HBP is $25000
8. My notice of assessment indicates that I have the right to contribute to my RRSP for $7,000, can I contribute $8,500 without penalty? Yes, a surplus contribution of $ 2,000 can be done, but the deduction of the surplus must be applied to the following year.
9. What is the maximum we can withdraw our RRSP under the HBP with no tax penalty? $25,000
10. Can I use my tax return as the only cash for the down payment for the property I want to buy, if the RRSP were bought with borrowed money? Yes, but the customer must qualify in the
CMHC Multi-Source Program and pay the required premium for the CMHC mortgage
insurance.
11. I have $5,000 in RRSPs that I will use as cash down for the purchase of my residence. If my
notice of assessment indicates that I have the right to contribute up to $22,000 in my RRSP, can I make an RRSP loan of $22,000? No, because the total withdrawal would be $ 27,000 and a
taxpayer has the right to withdraw only $25,000 in its RRSP.
12. I have $ 10,000 invested in RRSPs, I want to use these RRSP as down payment for the
purchase of my residence. I signed an offer to purchase with my real estate agent on December
1st, 99. The date of signature at the notary is scheduled for April 1st, 2009.
On the 22nd ofDecember 2008, I withdraw from my RRSP an amount of $2,000. On February 20th, I withdraw the balance of my RRSP, or $8,000. Are these withdrawals will be treated as withdrawn under HBP?
Only the first withdrawal will be considered as HBP, the second $ 8,000 will be taxed. Why?
RRSP withdrawals under the HBP must be made in the same calendar year.
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THE TESTAMENT
A will is a vital element of estate planning, but many people do not know why. A will is a document that speaks in your name after your death.
It transmits your last wishes and allows you – you, and not the State - to identify the persons to whom you will leave the assets you have accumulated during your lifetime and, more importantly, the person(s) who will take care of your underage children if both parents die.
A will facilitates the administration of your estate; you could save income taxes and avoid the serious consequences of dying without a will. Yet, despite the importance of wills, it is estimated that only half of Canadians have one.
This is alarming when one considers the benefits that a will provides and the relatively low cost of its preparation. We work very hard to accumulate wealth, so why not ensure it will not be wasted?
Protection for your family or your business
A will is the basis of an estate plan. A will properly prepared means that your assets will be distributed as per your wishes and that loved ones will benefit, unburdened by taxes. You can avoid unnecessary costs, endless payment settlements and the consequences of a State will.
You can also choose your estate executor and the guardian of your children. Given that the preparation of a will costs a few hundred dollars and knowing the potential consequences of the absence of such a document, it is obvious that everyone should have a Will.
What to do after having written a will?
Once your will is drafted, you must regularly review and change it whenever an event occurs in your life or the life of your heirs: marriage, divorce, birth, death, disability, new career or other major event. Note also that in most provinces, but not in Quebec, marriage annuls an earlier will unless specified otherwise.
A will must also be reviewed as soon as changes occur in laws governing income, family or inheritance taxes. Ideally, to ensure that it still reflects your intentions, a will should be reviewed annually or every two years, even if no major change has occurred.
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Housing Activity
Canada's national housing agency predicts home construction to make a comeback in the second half of this year and into 2010, however economists say it could be a long time before we see the same building frenzy that has dominated this decade.
Canada Mortgage and Housing Corp. said Thursday it believes housing starts will hit 141,900, of which 68,400 will be single-family detached homes and 73,500 multiple-housing units, such as condos.
CMHC chief economist Bob Dugan said economic uncertainty and lower employment tempered new-housing construction in the first half of this year.
"In the second half of 2009 and in 2010, we expect housing markets across Canada to strengthen," he said in releasing the agency's third-quarter outlook.
CMHC says improving activity on the resale market and lower inventory levels in both the new-and existing-home markets should prompt builders to increase residential construction.
CMHC predicts overall starts to reach 150,300 in 2010.
That compares to 211,056 housing starts recorded in 2008, of which 93,202 were single-family and 117,854 were multiple-housing units.
Annual housing starts have surpassed the 200,000 mark every year since 2002.
However, CIBC World Markets economist Benjamin Tal believes the recovery in housing starts will be much slower.
"I think those number are a bit on the high side," he said, predicting a "not very weak, but not very strong" recovery of about 140,000 units in 2010.
Tall also believes housing starts won't surpass 200,000 annually again for quite some time.
"We simply can't justify it. We don't have the demand," Tal said.
The new normal will be about 170,000 to 180,000 starts annually, which we could hit by 2011, Tal said.
Slower population growth and higher costs for new homes after provincial sales taxes are harmonized with the GST in provinces such as Ontario and B.C. next year will soften near-term growth in new home construction, Tal said.
Scotiabank economist Adrienne Warren also sees a slow recovery in new home building due to oversupply in some major markets, particularly in the condominium sector.
But Warren said the CMHC forecast is yet another sign Canada's real estate market is on the rebound, and performing better than previously thought.
"It reaffirms that the market is far exceeding expectations across the board," Warren said.
CMHC also said Thursday it expects total sales on the Multiple Listing Service (MLS) to hit 420,700 in 2009 compared with 433,990 in 2008.
That forecast is slightly higher than the Canadian Real Estate Association's recently revised 2009 resale forecast of 432,000 units.
CREA boosted its outlook last week, saying it expects resale activity to drop by 0.4 per cent in 2009 versus 2008. That's better than its previous forecast of a 14.7 per cent drop year-over-year.
CHMC said the average price of a home across Canada last year was $303,607 and is expected to fall slightly to $301,400 in 2009, before climbing to $306,300 in 2010.
Warren predicts 2009 sales and prices will be on par with last year's levels.
"By and large we are looking at matching last year's levels, and holding steady on average, which is far from what anyone expected a few months ago," she said.
She expects a "modest pickup" in sales in 2010.
"We will be looking at more of a balanced market."
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