1st-Timers and Old-Timers Get New Tax Credits

February 21, 2012

The BC Budget announced today contains pleasant surprises for first-time buyers who purchase newly built homes, and for seniors who make renovations to help them live independently.

Both initiatives echo other recent announcements that help out people trying to get into the BC real estate market and those who want to stay in their homes as long as possible.

This week's HST transition announcement raised the sales-tax exemption level on a newly built home to $850,000 from $525,000, which is more in line with the record-high real estate prices in the Lower Mainland.

And the new Home Adaptations for Independence (HAFI) program provides financial assistance of up to $20,000 for renovations such as handrails and grab bars that help seniors live as independently.

Now those programs combine with these new tax credits:

B.C. First-Time New Home Buyers' Bonus

The new B.C. First-Time New Home Buyers' Bonus will be a temporary, one-time refundable income tax credit for first-time home buyers who purchase a newly constructed home. The credit will be calculated as five per cent of the purchase price of the home, up to a maximum credit of $10,000.

The credit will be phased out at a rate of 20 per cent of net income in excess of $150,000 for single individuals and at a rate of 10 per cent of family net income in excess of $150,000 for couples. Only one credit can be claimed per home.

The credit will be available on purchases of newly constructed housing where both the HST applies and where a written agreement of purchase and sale is entered-into on or after February 21, 2012.

Click here for details.

B.C. Seniors' Home Renovation Tax Credit

The B.C. Seniors' Home Renovation Tax Credit will be a new refundable personal income tax credit to assist with the cost of permanent home renovations that provide individuals age 65 and over with increased independence, allowing them the flexibility to remain in their own homes longer.

The maximum credit will be $1,000 annually, calculated as 10 per cent of eligible expenditures. The credit will be available to individuals who incur eligible expenditures on or after April 1, 2012. The credit can be claimed by seniors, whether they own their home or rent, and by individuals who share a home with a senior relative.

Homebuilders See "Mixed News" in Budget

B.C.'s just-released budget is a mixed bag for B.C.'s construction industry, according to the Greater Vancouver Home Builders' Association(GVHBA).

"We were hoping that there would be some measures in the budget that would address the HST on home renovations; there was none," said Peter Simpson, GVHBA president and CEO.

"So we're still left with challenges with the underground economy and with people sitting on their wallets, delaying their decisions to do home renovations."

However, Simpson commended the government for the Seniors' Home Renovation Tax Credit of up to $1,000 and the >tax credit of up to $10,000 in the First-Time New Home Buyers' Bonus.

The latter move, he said, not only allows first-time homebuyers "that typically have to use the bank of Mom and Dad" to get into an expensive real estate market -- but also means a boost for the construction industry.

"[Tying it to] newly built homes spurs construction jobs," he said, commenting that each new housing start creates three person-years of employment.

Simpson said the Seniors' Home Renovation Tax Credit and the First-Time New Home Buyers' Bonus, together with last week's announcement of PST-transition rules that are geared at encouraging home buyers back into he market before the transition, are likely to boost B.C.'s construction activity.

"It's sure not going to hurt," he said.

As an REW.ca writer and editor, Elizabeth spends every day immersed in real estate news and opinion so she can deliver fresh, relevant articles to our visitors. She comes from a varied background in Internet marketing, book publishing, multimedia writing and radio, but what prepared her best for this position is her experience as a renter, seller and buyer in the Vancouver real estate market.
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