2009 Federal Budget Announced

Federal-Budget And what a budget it is for the real estate industry.

The Tories reached into the goody bag and pulled out:

  • A $5000 increase to the RRSP Home Buyers Plan, meaning first-time home buyers can now withdraw up to $25,000 from their RRSPs for a down payment–tax and interest-free.
  • A $750 tax credit for first-time home buyers to help with closing costs, such as legal fees, disbursements and land transfer taxes.
  • A 15% tax credit of up to $1,350 on eligible home renovation expenses undertaken before February 1, 2010.
  • $300 million for ecoENERGY Retrofit grants.
  • Up to $50 billion worth of additional mortgage buybacks. The government called this a “successful program” that “will reassure lenders that stable long-term financing will continue to be available…” (See sidebar below)
  • More “disclosures” for mortgage insurance designed to “help consumers better understand the mortgage insurance transaction. The Government will also propose new measures to ensure that Canadian consumers are charged no more for mortgage insurance than the true cost of obtaining that insurance.”

Liberal chief Michael Ignatieff is expected to announce whether the Liberals will support the budget today at 11am ET. Pundits expect him to back it, albeit hesitantly.

The New Democratic Party and Bloc Quebecois have already vowed to vote it down.

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Sidebar:

The government had this to say about the Insured Mortgage Purchase Program (IMPP) in its budget announcement:

As the mortgages that will be purchased already carry government backing, they represent no additional risk to the taxpayer. The competitive auction process used to purchase the mortgages is also designed to protect taxpayers by ensuring that the rate of return on the purchased mortgages exceeds the Government’s cost of borrowing. As a result, the IMPP program will continue to earn a positive financial return for the Government while at the same time filling a key gap in financing markets. The program has facilitated a reduction in prime and mortgage rates since its introduction.

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