Guide to First Time HomeBuyers’ Bonus in BC

The BC Government announced a new First-Time New Home Buyers’ Bonus Tax Credit yesterday.

This gives a little extra incentive to first time buyers’ to purchase new homes with a $10,000 tax credit. Before you get excited and go out to purchase a new home you should see the facts:

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  • This is a $10,000 income tax credit. You will not receive 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 (> $200,000 annual income).
  • An eligible new home includes new homes (i.e., newly constructed and substantially renovated homes) that are purchased from a builder and that are owner-built.
  • The $10,000 tax credit is applied against your income. Meaning that you do not get $10,000, but rather a tax credit equal to the tax rate on $10,000 of income in your personal tax bracket. For example, if you are in a 30% tax bracket, you get the equivalent of a $3,000 tax rebate.
  • This credit only applies to first time homebuyers.
  • You, or for couples, you and your spouse or common law partner, have never previously owned a primary residence.
  • You file a 2011 B.C. resident personal income tax return, or if you move to B.C.  after December 31, 2011, you file a 2012 B.C. resident personal income tax return (you will not be eligible for the bonus if you move to B.C. after December 31, 2012);
An idea is to use this bonus to payback your RRSP that you may use for the Home Buyer’s Plan.