Anxious Canadians have waited to see how our government
would tackle a monstrous world economic crisis and its spill-over effects into Canada. It was a year ago, in January 2008, that some
economists optimistically announced Canada would experience some pain however we would be immune to any kind of recession
here. As the mouse slept beside the elephant, the
elephant did roll over and we were also smothered by its weight.
It was in the last quarter of 2008, that the story
changed. The housing market continued to
slow down, vehicle sales fell and Canadian exports to the USA dropped. Many Canadian companies began
to see a decline in their own business and forced many to downsize. As companies began to cut back on their
workforce, the overall job losses in Canada
have continued to climb. It is
estimated that Canada
will lose approximately 170,000 jobs, this year alone.
Canada is most certainly in a recession and desperately awaits an injection of
hope. In response to this economic crisis,
Canadians must now place their faith in the new federal budget which was tabled
in the House of Commons, by the Honourable Jim Flaherty, Minister of Finance on January 27, 2009.
This very detailed 360-page report
entitled: “Canada’s
Economic Action Plan – Budget 2009” is available for review at the following
link:
http://www.budget.gc.ca/2009/pdf/budget-planbugetaire-eng.pdf
Recognizing that the Canadian housing industry is a
significant contributor to our economy and its growth and stability, a swift move
to stimulate the housing industry was critical. Canada’s
housing industry has experienced a drop in new building permits, housing starts,
and a decline in housing sales and home prices.
Along with the slow-down has come stricter lending and financing
guidelines which have also resulted in many mortgage defaults and
foreclosures. The Economic Action Plan promises
to provide a total of $7.8 billion in tax relief and funding. The objective is to give much needed support
and stimulation to this very important industry where thousands of jobs in real
estate, financing, construction, trades, and housing industry suppliers are in
jeopardy now.
As the Action Plan is now official, here are some highlights
of the Economic Action Plan, of interest to Canadian home owners:
1. Canadians who want to make their homes more energy efficient
are able to receive grants from the Federal and Provincial governments. These grants can total, up to $10,000 for
energy-saving approved and compliant upgrades.
The Action Plan outlines an additional $300 million that will be
allocated to this program, over a 2-year period. The program is already known as the
“ecoENERGY Retrofit” initiative. You may
visit the government website at ecoaction.gc.ca
and follow the links to the ecoENERGY Retrofit, or call 1-800-622-6232 to find
out how you, as a homeowner, can apply to receive available grants through the
program.
2. First time home buyers, will be
able to receive a $750 tax credit to offset closing costs. The tax relief will be extended to those
first time buyers who acquired a home after January 27, 2009. This is a great incentive especially
considering that the Ministry of Revenue extended a refund on the Land Transfer
Tax, to buyers of resale homes, back in December 2007. This allowed first-time home buyers to apply
for a refund, for up to a maximum of up to $2,000 on the land transfer taxes
paid. Details on this previous notice
can be found at the following link: http://www.rev.gov.on.ca/english/taxes/ltt/
3. A Home Renovation Tax Credit is
being introduced. For eligible home
renovation expenses, performed after January 27, 2009 and before February 1, 2010, individual home owners may
claim a tax credit up to a maximum of $1,350.
The credit must be claimed on your 2009 income tax return and the
renovation expenditure must be greater than $1,000 but not more than $10,000 to
receive the maximum credit of $1,350.
4. The Canada Revenue Agency Home
Buyers’ Plan (HBP) will also be revised to
allow first-time home buyers an opportunity to withdraw from their Registered
Retirement Savings Plan (RRSP) avoiding the requirement to pay tax on the
withdrawal but at a new higher amount.
The new withdrawal limit is $25,000 compared with the previous limit of
$20,000. An individual, or an individual
and their spouse, or common-law partner can combine their maximum limit to make
a total HBP withdrawal of $25,000 each, thus
bumping the maximum allowed HBP withdrawal
to $50,000 for the pair.
This article was written by Elizabeth Blair, a Licensed Mortgage Agent with
Mortgage Edge in Richmond Hill, Ontario.
Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area. You can contact Elizabeth directly by phone at (905) 510-5785 by email at eblair@mortgageedge.ca or you visit her website at:
www.missmortgage.ca
Elizabeth is licensed with the
Financial Services Commission of Ontario and is also a Member of IMBA (the
Independent Mortgage Brokers Association of Ontario) www.imba.ca
Lic # M08005880
Brokerage Lic # 10680
Head office is located at:
15
Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada
.
The list of affected services, does not stop there.