In the proposed BC budget
released yesterday the government announced a $10,000 First Time Homebuyer
Bonus.
It is important to understand the nuances of this program and share it with others. Here are the main bullet points of the program.
- First, this is a $10,000 income tax credit - not cash
- The tax credit is equal to 5% of the home price, subject to a maximum of $10,000
- The tax credit is pro-rated based on your income and phases out for higher income families
- The tax credit is applied at the time you file your annual tax return. Hence, it is not to be construed as funds that are available at closing date on a purchase.
- The $10,000 tax credit is effectively applied as an offset against your income. In the tax return preparation, that means that you do not get $10,000, but rather get a credit equal to the tax rate on $10,000 of income in your personal tax bracket. Since this is a BC tax credit, not federal, it only applies to the BC tax you pay on your personal income. The typical BC tax rates for individuals is 7.7%. So, you get the equivalent of a $770 tax payment to you.
- This credit only applies to brand new homes
- This credit only applies to first time homebuyers