Last chance for first-time buyers to save $10K

(December 06, 2012 , posted in Buying a Home)

With all the media attention on falling markets, low interest rates, HST changes, and predictions of a recession it's hard for buyers who are looking to purchase a home to know what to do right now. Should you wait out the market and see what happens? Should you buy now rather than risk rising rates and house prices in the Spring?

My experience tells me that the combination of a buyer's market, lower house prices, and low interest rates is actually the perfect time for buyers to purchase a new home. However, if you are a first time home buyer and looking for more incentive to go house shopping let's consider the changes coming to BC after April 1, 2013.

Any new homes purchased on April 1, 2013 and onwards will no longer be subject to HST (12% sales tax) but rather only a 5% PST as well as a transitional tax based on when the home was constructed and how near to completion it was on April 1, 2013. It's a complicated equation and it changes depending on the house price and construction dates. Suffice to say that buyers considering the purchase of a new home may be encouraged by the news of the HST leaving to wait until after April 1, 2013 if they are considering the purchase of a new home.

Before you rule out making your new home purchase this year or early 2013, you should consider a few additional points. Most developers include the HST or net HST in the price of your new home in order to be competitive with resale homes not subject to the tax. If the HST is not included in the purchase price take a look at the amount of HST you will be paying and the amount of rebate you will be receiving from the government (these rebates are designed to offset a large portion of the tax).

First time home buyers not only receive the HST rebate but have an additional grant available to them on the purchase of new construction. This grant, which was introduced in part to soften the HST blow and encourage new buyers to purchase, is only available to purchases made prior to April 1, 2013 and may well be worth making a purchase before time runs out.

The bonus is a one-time payment worth up to $10,000 for BC residents who are first-time home buyers and who purchase an eligible new home after February 20, 2012 and before April 1, 2013. Applicants can receive a cheque of up to $10,000, if they qualify, and the amount of the bonus is not taxable.

For full details on this program check out the government information at: http://www.sbr.gov.bc.ca/individuals/income_taxes/personal_income_tax/tax_credits/fthb_bonus.htm

Happy house hunting!

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