Flashcards in Home Ownership - Steve 03May2015 Deck (25)
Amt of each minimum annual repayment calculated as
(withdrawal amt. under the HBP / min. repayment over 15 yrs to avoid having to report taxable income).
First year for repayment is?
(Year of W/D +2) i.e. 2011 + 2 = 2013.
Latest date for the first repayment is calculated as
(March 1 of the year of the W/D + 3 yrs).
Taxpayer's HBP balance at any point is calculated as:
(total of all eligible w/d - (total of HBP repayments OR that were included in his income bcoz he failed to repay the the reqd amts to his RRSPs).
When Can you make the 2nd/ multiple W/D?
(the earlier of (30 days after obtaining ownership of a qualifying home AND jan 31 of the year after which you were to make your first W/D.
Can a tax payer W/D under the HBP to help a disabled person related to him by blood, marriage or adoption
Only if he does not have and HBP bal. can a tax payer make a W/D of up to 25k under the HBP to help a disabled person to acquire a home.
How do you calculate the minimum annual repayment AFTER the 1st year of repayment?
(HBP balance at the end of the year / N), where:
N is the remaining no. of repayment years according to the original schedule.
Under what conditions do you hv to repay a HBP W/D immediately?
1. If they were to die
2. Becomes a non-resident
3. Reaches 72yrs of age
(if you sell your house you do not hv to repay your W/D immediately).
Can you cancel your participation in the HBP?
A cancellation payment can only be made if the tax payer met all of the HBP conditions at the time of the W/D.
What happens when you make more than the min. payment ?
The min. payment in subsequent years would be reduced
First-Time Home Buyers tax credit - what is it?
- Is a Non-refundable tax credit based on an amt. of $5k for 1st time home buyers *
- it is claimable for the taxation year in which the home is acquired
- if the individual who acquires the home does not have enough of a tax liability to use the tax credit, the tax credit can be transferred to the individual's spouse/CL partner
- Any unused portion of an individual's 1st time HBTC may be claimed by the ind.'s spouse or CL partner.
- When 2 individuals jointly buy a home, more than 1 individual may be entitled to the FTHBC
First-Time Home Buyers tax credit - how is it calculated and eligibility?
- Calculated as ($5,000 x the conversion rate of 15%)
- to be eligible for the tax credit, the closing date for the purchase of the home must have been after 27Jan2010
Who is a First Time Home Buyer *?
Is an individual in a situation where:
> neither the individual nor the individual's spouse/common law partner owned and lived in another home in the calendar yr of the home purchase OR in any of the 4 preceding calendar years!
What is a qualifying home?
Is one that is currently eligible for the HBP that the individual or individual's spouse / CL partner intends to occupy as the Principal res. not later than 1yr after its acquisition.
What happens when you claim CCA on the portion of your home used for business purposes?
-The portion of your home used for business purposes looses its principal res. status
- Hence, you have to report a taxable capital gain
- Calculated as, ((appreciation in value of home since conversion of part of it to its business use x 25%) X capital gains inclusion rate of 50%)
What is a Home Relocation loan (HRL)?
Is a loan that the taxpayer uses to acquire a new home in a new location as a result of a change in his job location, provided that the distance between the OLD res. & NEW work location is at least >40kms than the distance between the NEW res. & NEW work location!
- ONLY in the case of a HRL can a taxpayer claim an offsetting deduction!
- Low interest home purchase loans and home relocation loans will both give rise to a taxable benefit.
Tax implication of using a low-interest employee loan to earn income from business, property or employment?
He/She will be able to deduct the value of BOTH the actual interest paid and the deemed interest benefit as an interest expense.
How is the offsetting deduction calculated when a taxpayer has to report a taxable benefit bcoz of a low interest Home Relocation loan provided by his employer?
He/she may be able to claim an offsetting deduction calculated as the least of (A, B and C) where:
A = diff. btwn the amt. of int. that he would have paid if the loan had been made at the prescribed rate and the amt. he actually paid.;
B = the int. on $25k at the prescribed rate; and
C = if he/she has multiple employer loans, the total interest benefit from all of these loans.
The principal portion of the loan provided by the employer will not be included in his taxable income.
A taxpayer can claim the mtg. interest and ppty taxes on his old home as a tax deduction subject to certain limits.
Amts. paid to employees to offset higher mtg. interest pmts at a new location must be included in taxable income.
- Can deduct eligible moving expenses from income that she earns at her new location in Canada if she moves to start a new job or business OR to attend full time at a post secondary inst.
- The new home must be at least 40kms closer to the new school or place of work
What qualifies as Moving expenses to be deducted?
>Moving expenses can only be deducted to the extent that he / she earns income at the new location during the year of the move!
> Moving expenses + real estate comm. + land trf tax + utilities
> (The lesser of (eligible moving expenses AND income earned earned at the new location during the year))
What is the capital gains exemption for a principal residence ?
- A capital gains exemption for a principal residence is an income tax deduction fm the capital gain on the disposition of a principal res.
- Taxpayer only needs to designate it when he disposes of the property.
How is the capital gains exemption for a principal residence calculated?
(((N1+1) / N2) X Capital gain) where:
> N1 = no. of yrs designated as principal res. after 1971, calculated as ((last yr designated - first yr designated) + 1
> N2 = no. of full or partial taxation yrs of ownership after 1971, calculated as ((last yr of ownership - first yr of ownership ) + 1)
Can common law partners designate two principal residences?
-If they have NOT been living in a conjugal relationship they can designate two principal residences.
- A CL r'ship is considered terminated if they have been living apart for more than 90days
- If a couple have a child together and they live together in a conjugal r'ship, the requirement of 12mths is waived else they have to be living together in a conjugal r'ship for at least 12mths to be considered CL partners.
How do you calculate the taxable capital gain after the principal residence exemption?
1st Calculate: The CGE for a principal res.
Capital gain X ( 1 - ((N1 + 1) / N2)
((Capital gain X ( 1 - ((N1 + 1) / N2))) x capital gains inclusion rate