Is the Canadian First Time Home-Buyers Tax Credit Helping Stimulate the Property Market?
Wednesday, November 18th, 2009 Subscribe To Our Feed
One of the most featured incentives in the governments plan to help with the real estate depression was the First Time Home-Buyers Tax Credit. However, considered next to the first time home-buyers tax credit given by the US government, the Canadian one seems like a joke. Although who’s finding it amusing?
To start, let’s compare the two tax credits. The Canadian First-Time Homebuyer’s Tax Credit, presented by the Federal government, is based on a $5,000 deductible. Using the deductible and multiplying it by the lowest income tax rate, for a housing owner this will come to less than $800 net if you haven’t owned a property within the last four years.
In the USA the real estate value is the key to this credit as up to 10% of its value is used to calculate the tax credit. There is one meaningful difference – this sum is not removed from the tax base (like ours), but deducted from the purchaser’s income tax owing. The tax credit incentive is cashed back to the new house purchaser if tax owed by them doesn’t top the $8,000. This tax credit is on offer to those who haven’t owned housing in the three years prior to taking advantage of the tax credit.
The Canadian and US real estate market recovery is down to very different things; in the US its down to these enormous tax credits whilst in Canada it is believed to be down to interest rate cuts. This actively reduced the restricting pressure of a down payment and thus put a lot of purchasing power into the hands of the first time property buyers. The question of whether the Canadian economic action plan shouldn’t take the tax credit more intently comes simply, but the answer is more complicated.
What Canadians need to ask themselves, is “do we need it”? The force of the Canadian recession vs the US recession on our specific real estate markets has been radically different. The Canadian market made a comeback within a few months with the main losers being housing investors and estate agents; but the Americans have seen the decline hit home owners with a surge of short sales and forclosures.
Looking at the fiscal conditions we also see a variance. Billions of dollars in lost tax revenue doesn’t help the already massive budget loss when 1.5 million taxpayers are claiming this tax credit.
To read the rest, please look at our original article “Is the First Time Home-Buyers Tax Credit Really as Good as It Sounds?” Thank you.
Technorati Tags:
Related Tags:
Possible Related Posts
