How the budget yesterday affects you...

Incentives! Incentives! Incentives!

As a future real estate agent/chartered accountant, I feel as if it's my duty to report to everyone the items that were offered in the most recent federal budget for real estate participants. Now, the incentives that have been offered are not for everyone. There is a targeted market for the incentives and you should speak to an accountant or a knowledgeable real estate agent for more information for your particular situation.

First, the maximum under the Home Buyer's Plan has increased from $20,000 to $25,000. This means that you may withdraw up to $25,000 tax free (repayments are required over 15 years) from your RRSP to purchase your first home. RRSP contributions reduce your taxable income, so that your taxes owing are much lower. As a result, you may be entitled to a nice refund. If done properly, you can save yourself a lot of money when purchasing your first home. You should speak to an accountant to find out the details of how to best take advantage of the tax implications of your purchase.

Now, the importance of the $5000 increase can be significant in some circumstances. The Canadian mortgage system requires mortgage insurance when purchasing a home for under a 25% down payment. This means that more of your down payment can come from taking advantage of this plan. Please plan your home purchase with a knowledgeable salesperson.

Next, there is a new credit being offered for first time home buyer's. This is separate from the home buyer's plan. You really do not have to do anything to earn this credit other than purchase your first home, and have an acccountant that knows what they are doing. This is a non-refundable credit of 15% based on $5,000. This credit is available to first-tiime home buyers after January 27, 2009.

I realize that I may have spoken a foreign language to you. Basically, the point I want to get across is that if you are thinking of purchasing a home is to think of me. I have the required knowledge to make sure the purchase is done properly, saving your hundreds and possibly thousands of $$$. I have extensive knowledge of the Ottawa market having lived in Ottawa for 25 years, and I have been working in accounting since 2004.

Lawyer fees

The other day someone had asked me about lawyer fees on a real estate purchase. This is a bit of a tricky area. It's sort of like the Southwest Airlines commercials. You know, the ones where the guys are scuba diving when one of the men realize that is no oxygen tank, and finds out after he's under water that there was an extra charge. There are always extra costs to consider.

First, I was charged $400 by my lawyer, but that did not include many of his disbursements. Some lawyer's may include their disbursements in their quotes, so the quotes can differ quite a bit. When I went for a mortgage, the mortgage broker had estimated costs of about $1400 for a lawyer. I am assuming that this amount included many of the disbursements. All in all, I paid about $1000 for all of my legal work. This includes title registration and other various things lawyer's do. I recommend that you budget for the worse (say $1400) just in case, but realistically it should be less if you have a decent lawyer.