Cities need income to pay their employees and provide services to their citizens. The main way for them to obtain and increase them is through property taxes. They, therefore, compete in imagination to attract new residents. The means are varied and sometimes imaginative. Provincial and federal governments also offer homeownership programs. However, this is done from another perspective, that of stimulating the economy, notably through residential construction. In the context of this text, the focus has been on new homeownership programs. So let’s take a look at what’s out there. From the https://www.atlantadreamliving.com/, Atlanta GA real estate this is very essential.
There are two types of government aid:
- Tax incentives (e.g. HBP, tax credit),
- Financial assistance to reduce the purchase price,
- Refund of part of the CMHC insurance premium,
- The incentive for the purchase of an energy-efficient home.
The incentive helps first time home buyers. A budget envelope of 1.25 billion over three years is planned for this purpose as of the year 2019-2020. Most types of housing are eligible. For multi-family dwellings, the number of dwellings is limited to 4. There are a few criteria to be met in order to be eligible for this measure. The buyer must have the required down payment corresponding to 5% of the sale price of the house. The eligible income of buyers must not exceed $ 120,000 and the total borrowing must be limited to four times the eligible income. If these criteria are met, the Mortgage and Housing Corporation will offer you a 5 or 10% participating mortgage for the purchase of a new property.
To understand this measure, take the example of a house with a sale price of $ 400,000. Under this program, the buyer can request an amount of $ 40,000 which corresponds to 10% of the housing price in the form of a mortgage loan from MHC. For its part, the buyer pays a down payment of 5% or $ 20,000. Thanks to this, the amount of the insured mortgage decreases to $ 340,000. Its monthly financial cost will, therefore, be reduced to $ 1,745, which represents a saving of $ 228 per month compared to a mortgage of a house of $ 400,000 which would not benefit from this measure assuming that the rate of interest is 3.5% and that the amortization is spread over 25 years.
However, after 25 years or when the house is sold, you will have to repay the incentive. If we come back to the previous example where the incentive received is $ 40,000 or 10% of the sale price, you will have to repay 10% of the new value of the house at the time of sale or after 25 years. If the house is then worth $ 500,000, the reimbursement will be $ 50,000. The same calculation method applies in the case of a 5% incentive.
Home Ownership Plan
To adjust to the growing rise in real estate, the government is increasing the maximum withdrawal amount under an HBP from $ 25,000 to $ 35,000. This plan works like this: it allows each taxpayer to withdraw up to $ 35,000 from their retirement savings plan in order to acquire their first property. The money will be used for the down payment. Unlike an RRSP withdrawal, the HBP withdrawal is not added to the person’s income.