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Tax advantages on buying your own home in Canada - Research Paper Example

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The research paper puts into perspective the issue of tax advantage of owning a home in Canada. The paper also illuminates Professor Tristani’s view that owning a home may not be advantageous after all. …
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Tax advantages on buying your own home in Canada
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Download file to see previous pages Home ownership is a critical subject that needs to be handled with care; in the recent past, most Canadians have never had the coveted opportunity of owning a home. Nevertheless, with the tax advantages in place more Canadians are having the opportunity to own a home. Every time one requires to purchase a house such a person must consider of the tax benefits involved in such an investment. The government has made frantic efforts to ensure that citizens are empowered to own homes. Therefore, households which purchase houses usually make a great deal in savings. However, several restrictions and procedures control the tax benefits. It is therefore, critical that deliberate efforts are taken by potential homeowners to consult with several tax professionals such as accountants to help them to fully understand the benefits of owning a home. The subsequent paragraph illuminates the tax benefits of owning a home in Canada as well as Professor Tristani’s view that owning a home may not be advantageous after all. Tax Benefits of Owning a home Deductions on mortgage interest are one tax benefit that comes with owning a house in Canada. The Government in a bid to ensure that more households own homes has partnered with several commercial financial institutions such as banks with a view of effecting deductions on mortgage interest when the applicants meet some standards set (Canada, 2006). In fact, it is very possible for individuals to be offered tax deductions for the interest payable on mortgage taken for purchase, of home or for improvement of home. It is worth noting that although there are several deductions on mortgage interest the procedures involved are quite elaborate. Therefore, expert guidance is required so that a potential homebuyer does not miss the benefits that come with it (Andersen, 2009). Access Access to mortgage is one critical achievement that the government can take credit for removal of the many restrictions that had barred several people from owning homes. For example, currently Canadians are not required to offer collateral on mortgagees, and this means that even people with average income who do not have assets have the opportunity of owning a home. Moreover, the many bureaucracies that characterized application to obtain a mortgage have been reduced considerably. What is more, even the rate of interest on mortgage is at all-time low at 4%. The other tax benefit of owning a home can be realized from the deductions that are pegged to home improvement and repairs. Improvement and repairs to home are crucial in the sense that they result in increasing the value of the house, make it to be used for a different purpose, or increasing its value. However, homeowner must be alive to the fact that ordinary cost incurred with maintaining the home do not qualify for deductions (Higgins, 2004). It is currently possible for people to secure loans for repairs and improvement of the value of the house. This possibility has gone a long way to ensuring that majority of Canadians lengthen the useful period of their homes. When the individual applying for the mortgage follows the right procedures and meets the requirement for reduction, the individual will be offered a deduction on interest for a mortgage taken to facilitate repairs and maintenance of the house. Deducting of points and closing of costs is yet another tax benefit that is inherent in home ownership. Every other time when one secures a mortgage, such a mortgage is charged costs referred to as lender points. The faster the one pays up the mortgage and accruing interest the more points he is awarded. This means that depending on the points one has he can qualify for deduc ...Download file to see next pages Read More
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