Why Buy Your First Home using Elena's Help?
Ever heard of renters trap? It's an industry buzz phrase used to identify those of you who are currently renting a house or apartment and feel that you could never afford a home of your own simply due to the fact that you do not have the adequate savings for a down payment on a mortgage or perhaps you may be experiencing credit problems.
My advice to you? Stop paying your landlords' mortgage and speak with me! Now before you run right out and put stop-payments on your rent cheques, let me explain...
In less than three years I have personally helped over 80 families realize their dream of home ownership. I do not say this to impress you, but to impress upon you that there are ways, simple ways, to become a homeowner.
Please go to free online reports, get all the helpful information, browse through my website at your leisure, and see for yourself how I can help. When you're ready, or if you have any questions whatsoever, I am only a phone call or email away.
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First Time Buyers – $2,000 Land Transfer Tax Rebate
Must be 18 years of age or older
Must have not owned an interest in a home anywhere in the world.
Your spouse has never owned an interest in a home anywhere in the world while married to you.
Only applies to a new home (not to resales).
Must be used as the principal residence of the purchaser. |
First Time Buyers-Get Your Share of the Secret $$$$$
The Opportunity
Every first time buyer has the right to redeem up to $20,000 from their RRSP at the time of a first home purchase. This is the Home Buyer’s Plan offered by the Canadian Government to encourage home ownership.
The Secret
The little-known secret I am about to share with you is that the money does NOT need to be used strictly for the downpayment on your house or condo purchase. It can also be used to pay closing costs, fund renovations, buy a car, or pay down other debts. The last option (pay a debt) is the one I suggest you take advantage of with this plan.
You Must Plan Ahead
The RRSP has to be setup at least 90 days before you purchase the home, that is; 90 days before closing day. Here are the simple steps you need to take to get the easiest money you will likely ever have the opportunity to make.
Step 1 – Determine RRSP available
Find your Tax Assessment form from Canada Customs and Revenue for last year. This came with your tax refund/receipt last Spring. Check to see what your allowable RRSP contribution is for this year. If you are like most people, especially most first time home buyers, you have thousands of dollars of unused RRSP contribution potential. Let’s assume you and your spouse can both contribute the full $20,000 of RRSP allowed under this plan.
Step 2 – Get a Loan
Go to your bank, or favorite lender and borrow $40,000. Banks are eager to lend money to people who are borrowing to buy an asset like an RRSP. You may invest in the RRSP with them or invest through your own financial advisor – banks cannot "tie-in" the loan with the RRSP investment decision – so don’t feel obligated.
Take out the loan for a long term, say; 5-10 years. It doesn’t really matter much since you will get rid of the loan in 3 months or so anyway. The longer term of the loan will simply make the payments lower while you have the loan. You will need to have sufficient funds or cash flow from earnings to repay the personal loan (principle and interest) over a short period of time. A demand loan allows you to repay just the interest until you repay the principle as a lump sum. You pick whatever suits you best.
This plan will also work if you borrow from your family interest free and pay them back. You will then save paying the only cost involved in this plan which is the loan interest. You can, of course, divide the funds you borrow between any sources you choose, say; $10,000 from your family and $10,000 from the bank, or whatever.
Step 3 – File Your Tax Return
Prepare your tax returns for this year and file next year on March 1st. Now, just wait for the big refund cheque to arrive! If you file using the new telephone or electronic options you will get your refund faster. Consult a tax expert for details.
See the table below for some examples of refunds you can expect depending on your income levels and tax rates.
|
Personal Taxable Income
(Individual) |
Marginal Tax Rate
(Federal & Provincial) |
Refund on $20,000
RRSP Invested |
|
Up to $32,000 |
22% |
$4,400 |
|
$32,000 - $65,000 |
31% |
$6,200 |
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$65,000 – 105,000 |
37% |
$7,400 |
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$105,000 & above |
40% |
$8,000 |
Note: These tax rates are approximate and for illustrative purposes only. Your marginal tax rate and refund may vary. Consult a tax expert if you want a closer approximation.
Step 4 – Get Your Refund
In this example, we will assume you are at a 30% tax bracket. You should get back about $6,000 each in tax refunds (rough estimate) based on reducing your taxable income by $20,000 each.
Step 5 – Buy Your First Home
This plan only works if you are planning to buy a home and you are a first time home buyer. You need to invest in the RRSP at least 90 days before your Closing Date, the date you get the keys. Don’t confuse the "Closing Date" with the date you commit to a firm offer to purchase – this is called the "Completion Date". There is usually a 2-3 month period between these two dates when buying re-sale property to allow both Buyer and Seller to make arrangements to move, etc.
Step 6 – Cash-in the RRSP & Pay off the Loan
Go to your lender and cash in each of your $20,000 worth of RRSP’s. Apply the cash towards the loan. The only cost to you will have been the amount of interest paid while you waited for your tax refunds . This could be as little as 90 days and for example a 5% personal loan rate would be under $200 per month in interest or $600 for 3 months. Consult your lender for exact amounts.
In Summary
You have just earned $12,000 in as little as 90 days! You have paid back the loan at a small cost of a few hundred dollars in interest. You can use the windfall of $12,000 towards a downpayment or anything else you need money for like new furniture or a new car.
You will both need to reinvest the $20,000 back into your RRSP’s over the next 15 years (1/15 of $20,000 is $1,333 each per year). Any year that you do not contribute at least 1/15 of the amount you took out will simply be taxed as a RRSP withdrawal for that amount for that year - it is added to your taxable income for that year’s return. You do not get any tax refund on the amount you pay back each year as you have already been given the refund – come on now - the government isn’t that generous!
I hope you can and do take advantage of this one-time opportunity and that your new home is everything you want it to be.
416-739-7200 office/24hrs pager
905-770-4968 direct
416-720-5469 cellular
or e-mail:
ediamond@trebnet.com
My Guaranteed Services for Buyers:
6 Months -Love it or Leave it Guarantee
* If up to 6 months after moving in you are not completely satisfied with a house you bought with my assistance I'll sell it for absolutely free!
24 Hour- Cancel Anytime Guarantee
* If you are not completely satisfied with my service, you can cancel our agreement, anytime, no questions asked!
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