In this article, we explain these tools and look at how they can help you buy a home. The tools include the Home Buyers’ Plan, the new First-Time Homebuyers’ Incentive, and the various tax rebates and credits available to first-time homebuyers.

Home Buyers’ Plan: Borrowing from your RRSP

The Home Buyers’ Plan lets any first-time homebuyer buying or building a home to borrow up to $35,000 from their Registered Retirement Savings Plan (RRSP). This amount used to be $25,000 until March 19, 2019, when it was raised to $35,000. If you’re purchasing your home with someone else, like a significant other, each person can use the Home Buyers’ Plan for a total of $70,000.

Although it mentions “first-time” homebuyers, if you’ve previously participated in the plan, you may be able to do it again if your borrowing balance is 0 as of January 1st of the year. Just remember that every year that the money isn’t in your RRSP is another year that it’s not growing. Without the help of this appreciation, it could impact what you have ready for retirement.

Although withdrawing this money is tax-free, it has to be repaid within 15 years to remain so. The repayment period starts the second year after the year that the money is withdrawn. So funds withdrawn in 2019 have 2021 as the first year of repayment. The tax consequences of not paying back the loan within the allotted time could result in a hefty income tax.

Unlike mortgages and other loans, there are no consequences for paying back the money early.

First-Time Homebuyer Incentive: Sharing Equity with the Government

The First-Time Homebuyer Incentive (FTHBI) started on September 2nd, 2019 as part of the government’s national housing strategy. It’s expected to help Canadians fitting into a specific criterion reduce monthly mortgage payments by $286.

The government does this through a shared-equity mortgage program, where they provide a first-time homebuyer with 10% of the purchase price of a new home, or 5% of a resale home. This capital comes interest-free because it is not a loan. The government is actually purchasing part of the equity.

When the property is sold or after 25 years, the homebuyer must pay back either 10% or 5% of the home’s current market value. Thus, if the home declined in value, the homeowner pays back less than what they got. If the home’s value appreciated, they must pay back more.

For example, a homebuyer purchases a $100,000 new home and receives $10,000 (10%) from the FTHBI. If the home appreciates to $400,000 after 25 years or when they sell, they’ll have to pay back $40,000—10% of the market value after 25 years or at the time of the sale. One big benefit is that this amount can be paid back at any time, meaning you could pay it back when the property market is weaker to maximize the benefit.

As great as it sounds, there are severe limitations to this tool. To qualify for FTHBI, homebuyers must have a combined household income of $120,000 or less. The price of the mortgage plus the incentive amount also cannot exceed more than four times the buyers’ household income. This effectively limits the maximum purchase price of a qualified home to around $500,000. This likely rules out Vancouver or Toronto purchases, as even most condos in these cities have surpassed this maximum purchase price.

Another drawback of the program is that homebuyers using the plan with less than a 20% downpayment still need mortgage default insurance. If you have 10% of the purchase price ready and hope to get another 10% from FTHBI, this won’t help you wiggle your way out of default insurance. The FTHBI is almost like a second mortgage on your home—not part of your down payment.

Tax Rebates and Credits

In addition to tools that can help you get the money you need for a down payment or to reduce monthly mortgage payments, multiple tax rebates and credits can help avoid some of the costs of purchasing your first home.

First-Time Home Buyers’ Tax Credit

The First-Time Home Buyers’ Tax Credit came into effect in 2009. It provides a $5,000 non-refundable tax credit if you and the home you’re buying fit a certain criterion. The credit works out to a maximum of $750 back in your pocket.

To qualify, you and your spouse/common-law partner need to buy a qualifying home and must also have not lived in another home owned by you or your partner in the past four years. You and your partner also get a combined total of $5,000 tax credits. This means that regardless of whether it’s a solo or joint purchase, the maximum tax credit is $5,000.

HST/GST Rebate

The HST/GST housing rebate allows a homeowner to recover the GST or federal portion of HST from the purchase of their home or from any renovations that they made to it. To qualify, this home must be your primary place of residence, among other conditions. Depending on your province, the PST or provincial portion of the HST may also be recoverable.

Land Transfer Tax Rebate

If you’re a first-time homebuyer purchasing a home in British Columbia, Ontario, or Prince Edward Island, you could also recover some or all of the land transfer tax paid on your purchase. The recoverable amount depends on the specific province. The City of Toronto also provides a rebate on the city’s land transfer tax, in addition to the provincial one. The qualifications for each rebate differ depending on the province and whether you’re purchasing in the City of Toronto.

As a first-time homebuyer, many tools can help you purchase your first home. You can borrow from your RRSP through the Home Buyers’ Plan, split the equity of your home with the government via First-Time Homebuyer Incentive, or recover some money through various tax credits and rebates. Make sure to speak to an accountant and your realtor to make the best use of these tools.

The post The Tools Available to Canadians Purchasing Their First Home first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.

With spring just around the corner — she says, hopefully, in -27 C weather — we are quickly approaching moving season. Hard to believe that time is going by so quickly, she says, again, adjusting her toque and scarf.

June through September tend to be the most popular months to move, according to the Canadian Association of Movers, but we all know there are some eager beavers who may score some potential savings by moving during the unpredictable months leading up to peak season.

Regardless of when you decide to make the grand transition, there is a lot of stress that comes with it. There are a lot of moving parts and it’s all happening at once and the whole experience can feel pretty chaotic. But, there is a secret. Well, it’s not really a secret, we all know it, it’s just sometimes hard to practice than to preach it. The secret is — drumroll, please — PREPARATION!

Here are a few tips to help you break this gargantuan task into smaller, attainable tasks.

First things first: congratulations on your move! This is an exciting time — despite all the craziness — and I hope you take a moment to really appreciate it all. Take it all in. Next, it’s time to map out a plan. Grab that notebook and let’s draw the blueprints for plan “Moving Possible”. 

PLAN AHEAD, GIVE YOURSELF TIME

Remax suggests planning a move at least six weeks in advance is best. By giving yourself plenty of time, Remax says, you can give yourself the time necessary to “edit” your belongings. This way, you are only moving the things you actually want to keep and use in your new home.

DECLUTTER AS YOU GO

Create a designated bin, box or bag for donations, trash and keep, and start in your most un-used space. For me, this would be the garage, basement and closets — AKA impromptu storage units. I know I won’t be needing to access the things I do wind up keeping from these spaces straight away, so they are safe to be packed up earlier on in the grand scheme of things. Plus, I’ll probably be throwing away or donating the most from these areas, anyway.

COLLECT FREE BOXES

It is in these first few weeks that you can start collecting boxes from local shops. A lot of establishments are more than thrilled to give you free pickings of their seemingly endless supply of boxes. I suggest picking boxes up from liquor stores — especially Superstore or Loblaws, as they seem to have more available. Wine boxes are the perfect size to move heavy items, such as books because you can’t overpack them. And they won’t destroy your back, or your mover’s back, on the big day.

With that being said, it’s time to start looking for a moving company — if that’s the route you intend on taking.

FINDING THE RIGHT MOVING COMPANY

Ask friends and family who have recently moved if they have any good recommendations and read reviews online. Online reviews from reputable sources can seriously be a lifesaver. Checking the Better Business Bureau is another way to ensure you are getting the best company to handle your belongings. It’s OK to shop around and ask for quotes and estimates. Be sure to ask questions about hidden fees, contracts and insurance that will cover your stuff in case of losses and damage.

PREVENTING LOSS

As for loss prevention tricks, Updater.com’s Most Epic Moving Checklist suggests compiling all of your important documents on a cloud-based service in case anything goes missing or is temporarily buried in the bottom of that last-to-be-opened box. They also encourage people to keep all important personal records such as birth certificates and government-issued ID in a portable folder that you can carry with you in your vehicle on the big day.

Also be sure to keep an ongoing document on Google Docs, or a similar platform, to compile all of your moving-related costs and expenses. This could come in handy come tax season for deductions.

PACKING UP

As the moving day approaches and it’s time to start packing the more high-traffic areas of your home, Remax suggests packing items you will need first in clear totes. That way they are easily located once you get to your new home.

Packing up kitchens always seems to be the most daunting task because of all of the fragile items. Be sure to use newspapers, hand towels or t-shirts in between dishes to prevent breakage. I’d recommend socks and t-shirts because it’s essentially a 2-in-1. You’ll be packing up your dishes and your clothes and everything will be nice, snug and secure during travel.

While putting your kitchen away, be sure to donate all unwanted and unopened food to help lighten the load. The same can be said for those unused toiletries we all seem to have stashed around the bathroom and linen closets.

Be sure to meal prep some food to sustain you during those days leading up to moving day that doesn’t require any utensils that are already stashed away. This will help you save some money while skipping out on the fast food and take out.

The key tip I can offer you for packing is to do a little bit every day. No one wants to have to do it all the night before. That’s how things get misplaced, lost or even broken.

THE DAY BEFORE

Time’s running out. It’s time to finish that deep clean and ensure everything is ready for your home’s new occupants.

Take some photographs of the space so you have evidence that your place was, indeed, move-out ready. This is an important tip for renters as well. You want to make sure that you have proof your home was in fantastic condition before the new tenants moved in.

Unplug your freezer and fridge to allow it to defrost. Lay towels on the floor for any potential spillage. Give this a wipe down in the morning and it will be as good as new.

Make sure your essentials are packed away in an easy-to-grab container. These include any medications, clothes, documents, toiletries and snacks and food you’ll need within the next 24-hours.

The Most Epic Moving Checklist also suggests to pull out cash to tip your movers. Or for those who are using a self-moving service like U-Haul, make sure you have access to funds for that pizza and beer you promised your friends.

Be sure to get a lot of sleep because tomorrow is going to be a long one.

THE DAY OF

Rise and shine! It’s time to move! If you have movers scheduled to come, be sure to be there to greet them and show them where all of the agreed-upon items are to be moved. Lay blankets, moving pads or towels to protect your floors and walls. And don’t forget to use these on big items of furniture in the truck to prevent scratches and dings.

If you’ve hired movers, many companies will come in and take all the preventive measures for you, however, there’s no harm in having some extra, just in case.

When you get to your new address, set up the bed and hang the shower curtain because chances are a nap and shower will be desperately needed as the journey of unpacking begins.

Now it’s time to settle into your new home. Congratulations, you made it! Welcome home.

The post Get a Move on Moving: A how-to guide on making the move painless first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.

Ah, love is in the air. Little pink, red and white Valentine’s Day decorations adorn every window of every store and heart-shaped candy is aplenty — and tempting. Couples are oversharing their affection in public and bombarding you with cutesy images on Instagram and Facebook.
Yes, Valentine’s Day is a macro lens on all romantic cliches, but what about when you zoom out? Enter today’s topic: Couples living.

Whether renting or purchasing a home, moving in with a partner is a significant moment in any relationship and there are a lot of moving parts we have to consider in this decision-making process: What happens if we break up? Are we ready yet? Is it better to move into a rental unit or buy our own place? Our incomes are very different, how do we strike a balance? Do we need to be married first? Our styles are very different, how do we decide how to decorate?

There is a seemingly endless stream of questions that you and your partner should discuss. And yes, unfortunately, some of these questions are going to bring about tough and uncomfortable conversations about finances and debt, future financial and life goals and more. But, it has got to be done if you are to gain a realistic picture of what your future with your partner entails.

Buying with your boo:

Buying a home with your partner is pretty scary — especially when you’re not married. It’s still less common to purchase a home with your boyfriend or girlfriend, so you may experience some stigma and backlash from friends and family. They may tell you that buying a home with someone you’re not married to is a deathwish. This is simply not true.

Although divorce rates have dropped slightly from their peak of 41% during the mid-’80s, CBC reported that four in 10 first marriages end in divorce — of course, this information was based on a 2006 census, but StatsCan has since stopped collecting divorce data. With that — somewhat tragic — info being said, it’s important to realize that these couples will also have to go through the break-up processes that unmarried common-law couples will endure. So, really, it’s essentially the same product with different labels.

Buying a lovenest with your honey is a great idea, especially if the market is leaning in your favour. Take advantage of that. Again, be sure to discuss debt and finances as your partner’s debt could influence the outcome of your mortgage approval.

The debt talk matters, Realtor.com says, because it will uncover your debt-to-income ratio, the “number your lender will look at to decide if you can pay back a loan.” This number can’t be higher than 43% and lenders will figure it out by adding up all monthly debts and dividing it by monthly income.

The down payment is another big-ticket item you’ll have to discuss with your partner. How will you afford this, plus closing costs? Realtor.com says this can be acquired through savings, a gift from a family member, or it can come from an RRSP. 

But who will pay for what? And how will the costs be divided? Realtor.com says this discussion is necessary before any paperwork is finalized. Some couples are fine merging all of their funds together in one giant pot and tackling everything together, but some find this can lead to a “yours and mine” mentality that can be detrimental to a relationship.

One way to conquer this is to keep things separate — to an extent — and based on income. It’s rare that couples earn the same amount of money so it doesn’t make a whole whack of sense to split the costs of a new home down the middle, 50-50. Instead, break it down.

One technique to do this involves opening a joint “house account” that both you and your partner will contribute to while keeping your other finances separate. Together, you can decide what you will pay together and what you will keep separate, such as student loans, or that travel debt you acquired in your gap year.

“Make a list of all your combined expenses: housing, taxes, insurance, utilities. Then talk salary,” Cynthia Ramnarace from HerMoney says. “If you make $60,000 and your partner makes $40,000, then you should pay 60 per cent of that total toward shared expenses and your partner 40 per cent.”

To make this fair and equal, set up a direct deposit from individual accounts to a shared-joint account. Be honest and keep that line of communication open. But, Ramnarace says, keep some emergency funds tucked aside in your personal account in case of unexpected changes in the bills department.

But what if we break up?

Breakups can happen whether your married or not, so Realtor.com suggests establishing a contract that defines what happens to the equity in such a case. This contract could give partners a limited time-frame of 30-60 days to buy the other out, or you can agree to sell the home and split the proceeds.

Having this contract in place, although bleak, can save you a lot of hardship if this situation ever arises. It’s best to think ahead and protect yourself.

Even if you’re renting, a contract like this isn’t a terrible idea. It could protect both of you and the financial contributions you invested in the relationship, like furniture and expensive housewares. Perhaps a deal can be made to buy out the other instead of feeling ripped off — on top of having a broken heart.

On a lighter note…

Now that all the serious talk is winding down, let’s discuss something a little more fun. DECORATING! You two have moved into your new home — rented or purchased, either way, congratulations! And it’s time to start decorating!

First things first, you’re going to have a lot of duplicates of things so it’s best to purge the doubles. This will save you space in your new home. No one needs four spatulas — you’re not running a Wendy’s out of your home.

Next, keep your all your sentimental things and mix your styles. The home should represent both of you and your individual styles, interests and flair.

Compromise, compromise, compromise. You will not be on the same page about every little detail, so really try to emphasize what is really important to you and what you are OK on budging on a bit. Again, you want the space to reflect both of your personalities while highlighting what makes you two work well together.

My only real big suggestion on this topic is to avoid conflict be sure to check in with each other a lot. Be sure to check in before making any crucial purchases and be sure to check in before you start randomly tossing things that may contain your partner’s personal belongings.

Enjoy this time. It can be really fun and you can really get to know each other on a whole new level.

To all you lovebirds out there, cohabitating or thinking about it, we at RMA wish you good luck and a very happy Valentine’s Day.

The post Moving in together: A big step first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.