Are you struggling to come up with the down payment for your first home? You may have the funds available without even realizing it! Read on.............
For regular RRSPs, the basic rule is simple: If you make a withdrawal from your RRSP, those funds are included in your income for the year that the withdrawal is made. The plan administrator will deduct the income tax from the funds being advanced and will remit the tax to Canada Revenue Agency on your behalf.
However, the RRSP HBP is a key exception to the basic rule on how RRSPs are treated. Under this plan, an individual can withdraw an amount not exceeding $25,000 from his or her own RRSP and use it towards the purchase of a home (but not an investment property), on a tax-free basis.
For those in a marriage or common-law partnership, each spouse can withdraw up to $25,000 from their respective plans tax-free, bringing the total to a maximum of $50,000 in tax-free funds that can be applied towards the purchase of a home.
There are certain conditions and limitations regarding the withdrawal of funds for this purpose. Essentially the withdrawal is an interest-free loan from your RRSP to yourself. You must repay the total amount withdrawn within 15 years, in annual installments. The first installment/payment is due starting in the second taxation year following the date of the withdrawal.
If you do not pay the annual installment in any year, then the installment amount will be included in your taxable income for that year.
Note that certain stipulations apply: Under the HBP the exception to the basic rule is available only if one or both spouses did not own an owner-occupied home during the period beginning in the fourth year before the withdrawal is made, and ending 31 days before the withdrawal.
Here’s an example of this time restriction:
If you want to take advantage of the HBP, you must complete the necessary paperwork and provide it to the institution that holds your RRSP. The form sets out the property address, confirms you will be occupying the property as your residence within one year of the purchase and confirms that you entered into a firm and binding Agreement of Purchase and Sale respecting the property.
If you plan to implement this RRSP Home Buyer’s Plan, I recommend that you speak to your RRSP plan administrator before starting on your home-buying journey.
Is your home boring? Do you ever feel like that you're just living in a 'cookie cutter box'? Sometimes it's good to 'think outside the box'. Here's some ideas that are literally 'off the wall'...........enjoy.
Inventory increases and sales drop in September, but overall sales for the year remain higher than last year.
Strong gains in the first-half of 2017 has put the Calgary year-to-date sales at seven per cent above last years' levels and 11 per cent below long-term averages, but challenges remain with easing sales and rising new listings.
Inventories rose across all property types to 6,861 units, while both apartment and attached-style properties saw the highest inventory on record for the month of September.
"The recent rise in inventories is preventing further price recovery as sales activity has moderated over recent months. This does not come as a surprise as sales activity is expected to remain modest by historical standards until more substantial economic improvements take hold," said CREB® chief economist Ann-Marie Lurie.
"Some may consider this a setback, but it is important to note that recent movements are balancing out the higher than expected gains that occurred in the first-half of the year."
New listings in September totaled 3,266 units, a year-over-year gain of nearly 10 per cent.
"There are several factors influencing new listings. Given the falling prices over the past two years, some sellers were waiting for market conditions to improve prior to listing their homes. More stability in the market has prompted many of those sellers to no longer delay their listing decision," said CREB® president David P. Brown.
"In some segments, rising new home inventories are also impacting total housing supply. Ultimately, prices are affected. However, this inventory also opens up opportunity for buyers to step up into a home that was financially unattainable."
As of September, unadjusted benchmark prices totaled $441,500. This is 0.2 per cent below last month, but nearly one per cent above last year. Downward price pressure this month occurred across most product types. However, year-to-date benchmark prices in the detached sector remain comparable to last year.
Prices in the detached sector remain relatively stable compared to last year. Condominium apartment prices remain four per cent below 2016 levels and twelve per cent below 2014 highs. This sector continues to struggle with price declines resulting from excess supply as months of supply pushed above eight months.
Growth in new listings outpaced sales preventing inventory declines
Sales posted a modest gain in August, but a rise in new listings kept inventory levels elevated.
Inventories totaled 6,624 units, where over half were comprised of attached and apartment style properties. While inventories were 16 per cent higher than August 2016 levels, the slight rise in sales prevented further gains in the months-of-supply, which remain just above four months.
"Employment growth is contributing to the stability in sales activity, but it is not enough to meet the recent rise in listings and make a substantial dent in inventory levels," said CREB® chief economist Ann-Marie Lurie.
"Unemployment rates remain elevated and job growth is mostly occurring outside the energy sector, slowing the recovery process. Broader economic improvements will be required prior to it translating into substantial improvements in the housing market."
The second month of higher inventories compared to sales weighed on prices for the month. The unadjusted city wide benchmark price totaled $442,300 in August. This is 0.3 percent below last month, but remains nearly one per cent above last year's levels. Overall total residential prices remain four per cent below peak levels.
"Buyers have several options in this market, and sellers need to continue to be realistic regarding the price they expect to receive for their home," said CREB® president David P. Brown.
"While some of the buyers are re-entering the market, they are also considering all of their options prior to making a commitment."
The pace of growth in detached sales has closely matched new listings this year. However, inventory levels continue to remain at 3,280 and months of supply pushed up to 3.32. Recent gains in months-of-supply prevented further gains in prices this month. Detached prices totaled $510,900 in August. This is slightly lower than last year, but 1.5 per cent above last year's levels.
With over seven months-of-supply, the excess supply continues to weigh heavily on the apartment condominium sector. As of August, the benchmark price totaled $263,300. This is one per cent below last month and three per cent below last year's levels. Downward price pressure in this sector is expected as supply levels remain elevated in the new, resale and rental market.
The first-half of 2017 marked a shift in Alberta's economy from recession to recovery, with conditions supporting stability rather than expansion.
"Economic challenges continue to exist, as high unemployment rates, weak migration levels and more stringent lending conditions are weighing on the housing market," said CREB® chief economist Ann-Marie Lurie.
"This will continue to cause some adjustments in the housing market for the remainder of this year. However, this is not expected to offset earlier gains supporting general stability in 2017."
Resale sales activity is expected to total 18,401 units in 2017, a 3.3 per cent improvement over last year. The pace of growth is slightly faster than originally anticipated, due to the stronger growth that occurred in the first half of the year.
"We saw many of those consumers who delayed any purchasing decisions willing to re-enter the market as concerns regarding the economy eased," said CREB® president David P. Brown.
"More potential buyers on the market helped move some of the product in inventory and started to create some price stability."
Improvements in the supply demand balance, primarily in the detached and attached sector, caused prices to start to trend up. Demand growth through the remainder of the year is expected to ease relative to inventory levels. This should prevent further substantial shifts in pricing. Overall, annual city wide prices are expected to remain at levels comparable to last year.
Despite generally improving trends, difficulties continue to exist in the condo-apartment ownership market. Rising sales cannot keep pace with the growth in new listings, keeping supply levels high and placing continued downward pressure on prices. This area of the housing market will likely continue to face challenges well into next year, as it will take time to absorb additional inventory in the resale, new and rental markets.
"Improvements in the labour market are supporting the shift in the housing market this year. However, activity over the past two years was amongst the weakest we have seen since the financial crisis," said Lurie.
"While the shift is welcome news for many, we continue to expect that process of recovery will be slow and dependent on the property type and location within the market."
The improving economy is being credited for the increase in new home builds.
Market sees modest inventory gains, but overall prices inch up
Sales exhibited stable growth through the first half of the year in the Calgary housing market, but the number of transactions slowed slightly in July compared to last year.
City-wide sales totaled 1,637 units, six per cent below July 2016 levels. Year-to-date sales activity totaled 11,957 units, nine per cent above last year.
"Sales growth exceeded expectations so far this year. Clients were re-entering the market after delaying decisions until there were some signs of economic improvement," said CREB®president David P. Brown.
"However, this recovery will require patience. There continues to be many new and resale ownership options available. This reduces the sense of the urgency for many consumers."
Easing sales were met with higher new listings, causing further gains in inventory levels. City-wide months of supply rose to four months, as inventory levels reached 6,675 units this month. This is 17 per cent higher than last year, but still below July highs recorded in 2008.
"Modest improvements in the labour market and net migration were necessary to support the turnaround in the housing market," said CREB® chief economist Ann-Marie Lurie.
"However, current inventory levels and changes in the lending market continue to weigh on housing demand. Easing demand growth combined with elevated levels of supply will slow the pace of price recovery in our market."
Driven by detached and attached housing sales, city-wide prices in July improved over the previous month and the previous year. However, it is nearly four per cent below previous monthly highs. Year-to-date benchmark averages remain 0.44 per cent below last year's levels.
Despite the current month activity, the detached sector continues to demonstrate conditions that are more balanced compared to last year.
Apartment condominium product continues to face oversupply in the resale and new home sector, causing further price declines. In July, the apartment benchmark price was $266,200. This is a three per cent decline over last year and nearly 12 per cent below peak prices.
Alberta leads Canadian provinces in growth.
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Stable prices in detached sector signal balanced conditions despite increased inventory
Calgary's housing market in June saw a modest improvement in sales along with an increase in new listings.
However, demand gains have not kept pace with the amount of new listings coming onto the market. This caused inventory levels to increase to 6,659 units, which is 11 per cent higher than last year's levels.
Despite the recent shift in inventory this month, second quarter activity continues to demonstrate improved supply-demand balance and price stability. City wide benchmark prices totaled $441,500 in June. This is a 0.5 per cent gain over last month and nearly one per cent higher than last year.
"The supply gain this month will be monitored. However, on a quarterly basis, inventory levels remain comparable to last year, sales have improved and there have been modest price gains. All of this remains consistent with expectations of a gradual recovery," said CREB® chief economist Ann-Marie Lurie.
Year-to-date residential sales in Calgary totaled 10,322 units, which is 12 per cent above last year's levels. New listings increased by three per cent over the same time period.
Overall, both the sales-to-new listings ratio and months of supply have trended down this year. This signals more stable pricing in the housing market this year.
"While there were many buyers waiting for lower prices to step into the housing market, there were also many sellers waiting until prices stabilized before listing their home," said CREB® president David P. Brown.
"Some of this recent growth in listings will help provide more choice, particularly in the detached market where market conditions had significantly tightened over the past few months."
Detached inventories and sales totaled 3,224 and 1,385 units, for a month of supply of 2.3 in June. Despite the recent rise in supply, over the first half of this year inventories have averaged 16 per cent below last year's levels while sales are 13 per cent higher, keeping this segment in more balanced conditions.
While activity is also improving in the attached segment of the market, resale activity in the ownership of apartment-style product continues to face challenges with weak sales relative to listings and rising months of supply.
As of June, the unadjusted benchmark price for an apartment style product totaled $265,800. This is nearly four per cent below last year's levels and 11 per cent below recent highs.