Episode 71 Transcript – Federal Budget

Hello! You’re live here with Jessi Johnson. My point of today is giving reference to the federal budget. It was recently released and how it is going to affect you as the consumer. I’ve got five major points here I will get into quickly. If you have any more questions please don’t hesitate to give me a call or drop me an email. First point, first time home buyers really got it good here. In the past you were able to take $20,000 of your RRSP and pull that money out without paying any penalty provided it was used as a down payment on the purchase of your first home. You can only do this once. The second your name is on title, any property, you are no longer able to use this option. This $20,000 has now been increased to $25,000. The trick is you have to re-pay a minimum of 1/15 every year until it’s back to normal. That’s the first step. It’s been increased to $25,000 for RRSP for down payments. Your next kicker is you are actually allowed to write off, that’s write off directly of your income, upwards of $5,000 on the purchase of your first home. What that basically means is it’s a federal tax which means you’re going to get a 15% tax cut. Off $5,000, 15%, essentially you’re going to get $750 in your pocket. You still have to spend that $5,000 and a lot of times on your first home you’re not going to have to spend that much. That will go towards your lawyer, potential property transfer tax, etc. That’s it for first time buyers. It’s awesome if you ask me. If you’re an existing owner and looking to renovate your property you now have tax cuts which start at $1,000. The maximum allowable write off on an annual basis is $9,000. It might be a one time thing, I’m not actually sure. If you exceed that you are only allowed to write off $9,000. I’m not going to lie, the Vancouver market is exceeding, it would be hard to not exceed $9,000. $9,000 would get you a closet, maybe a dog run in the backyard. Not much because it is pretty expensive for construction around here. What that actually works out to is your $9,000 maximum tax right off of your income equates to $1,350 in your pocket so it’s not much but it helps. If you’re only spending $9,000 in the first place, if you can cap your renovation budget at that point, getting another $1,350 is much more beneficial for you. The benefit of this is it technically gets the economy going because it gets you to spend money which obviously gets the economic engine going but you get a bit of tax back. It’s not going to hurt the Federal budget in that regard because you’re technically spending money there anyways. The two other points I want to get into; I won’t get into for too long because I do real estate finance and I don’t really get into other finance too much, is the middle class has taken some significant advantages here starting with the 15% tax bracket. You are now able to earn up to $40,726 prior to jumping up to the next tax bracket. The tax bracket for 22%, you’re allowed to make upwards of up to $81,452. Of course when you exceed these numbers you jump up to the next tax bracket and the governments going to get you. Ideally have some form of way to write this off, whether you’re a sub-contractor or you own your own business to bring those numbers down. The next big thing is your basic personal allowable income prior to being taxed is $10,320. The benefit of that is you could make $10,320 prior to the government dipping into your pockets and taking tax money. Either way, this is great! Great for me, great for you the consumer, great for everybody. Hopefully the government doesn’t promise too much tax cuts, too much spending and put us too far into the red. That’s my word of the day. Hope I wasn’t too long. If you have any questions you can reach me at www.firsthomeinfo.ca. My name is Jessi Johnson and have a good day! Remember, own your life! Bye.