Give Me Back My Five Bucks

NOTE: The following guest post is from Kerri-Lynn McAllister, Community Manager for RateHub.ca

It always amazes us in the mortgage industry how consumers will try to save a few dollars here and there via coupons, loyalty cards, etc – yet, when it comes to their mortgage, the same effort is not put forth. Not only should you compare mortgage rates and seek advice on products and terms, as a first-time home buyer, you should also be aware of the programs available to you that help recoup some of your investment, amounting to hundreds and even thousands of dollars.

Here are the programs and how you can apply for them.

1.     First-time home buyers’ tax credit

Who doesn’t want $750? It’s as easy as filling out a line on your tax return for first-time home buyers. The credit request must be filed in the same tax year the property was purchased, and you must not have owned a home as your primary residence within the last four years.

The $750 credit was created to help first-time buyers recover some of the closing costs on their first property, so recover away!

How? File under line 369 on your tax return [1].

2.     Land transfer tax rebates

Provincial land transfer taxes can hit you hard and unexpectedly, and if you live in Toronto, twice. [Toronto is the only municipality to have a tax on top of the provincial levy] Thankfully, much of this can be recovered through rebates if you are a first-time buyer in the provinces of Ontario, British Columbia, Prince Edward Island and the city of Toronto.

Land transfer tax fees are mandatory with any title transfer. First-time home buyers, however, can reclaim the full value of the tax up to a limit of $2,000 in Ontario, the full value for properties up to $425,000 in BC, and up to $3,725 in Toronto. In PEI, first-time buyers are exempt from paying the tax altogether if the property is less than $200,000 [2].

You can calculate provincial land transfer tax charges, including rebates, using a land transfer tax calculator.

How? Talk to your real estate lawyer.

3.     RRSP Home Buyers’ Plan

This last one is less a rebate and more a savings strategy for your down payment – but, it involves a number of tax credits worth including here. The RRSP Home Buyers’ Plan (HBP) allows first-time buyers to withdraw from their RRSPs tax-free up to $25,000 for a down payment on a property purchase [3].  Any contribution that you make to an RRSP is, of course, tax deductible at the time, but if you try to withdraw these funds before retirement, you must repay the tax credits. Herein lays the magic of the Home Buyers’ Plan: you not only can withdraw the funds tax-free for your first down payment, but when you make contributions to your RRSP prior to this, you can re-invest your tax savings every year for the purpose of your future home purchase.

The HBP withdrawal is considered a loan and you will have to repay your RRSP within 15 years. However, you do not have to pay interest because you are essentially paying yourself back.

How? Print off a copy of Form T1036 online from the Canada Revenue Agency. Fill out Section 1 and get the financial institution that holds your RRSP to fill out Section 2. Your institution will then send you a T4RSP form, which will verify the amount you withdrew from your RRSP through the HBP.  Reference the form in your income tax return for the year you made the withdrawal.

A little effort goes a long way

Considering the time commitment required to cut out coupons that get you a few dollars in savings (unless, of course, you are an Extreme Couponer), filling out some extra tax forms hardly seems laborious! Plus, we’re not talking dollars and cents here: we’re talking hundreds and thousands of dollars at stake.

What other first-time home buyer freebies and credits can you think of?

Kerri-Lynn McAllister is the Community Manager for RateHub.ca, a site that compares the best mortgage rates in Canada and provides first-time home buyer education and tools. Follow me on Twitter @RateHub_Canada.

A quick post today. I found this infographic while surfing the internet a few days ago:

Did any of the numbers shock you?

According to this data, 66% of students receive a mean monthly amount of $312 from home. Seriously? I think during my 5 years of post-secondary education, I received a few care packages (of mostly food) from my mom, but all of them combined probably didn’t equal $312. And I never received cold, hard cash. I wish.

When I lived in Michigan for University, I had to live off of the money I made during the summers when I was home (I wasn’t allowed to get a part-time job because I was an ‘international’ student-athlete, and there was some rule against it). True, I had a full athletic scholarship, but I earned that myself.

When I went to college in my hometown, I worked 2 part-time jobs in order to afford to feed myself. Although to be fair, I did live at home. I didn’t pay rent, but I did pay for everything else like school, books, equipment, groceries, gas, cell phone, etc. I struggled a fair bit (hence the $20,000 worth of debt when I graduated), but my parents never offered to give or lend me money, and I never asked.

Some of the stats shown are from a 2006 survey, so they’re a little outdated, but that’s also the year I graduated from college. They surveyed 1,200 students from 100 different schools nationwide (USA). It didn’t say whether the students were living on their own, or with their parents, which I assume would make a huge difference if we saw that split.

Was there anything from this infographic that you found surprising?

I almost never write “how to” posts, but after posting about my investment portfolio last week, I’ve had a lot of people e-mail me to ask about the procedure for signing up for the TD e-series mutual funds.

I started investing in TD Canada Trust e-series mutual funds over six years ago, and have been a satisfied customer for most of that time. The e-series index funds are a popular choice because they are a simple way to invest, and have among the lowest Management Expense Ratios (MERs) for mutual funds in Canada. However, the downside is that there is virtually no customer service available for these products.

From my own experience, TD Canada Trust really doesn’t make it easy or straight-forward for investors to purchase or cash out these funds. I’ve blogged about my frustrations before. But since the e-series funds aren’t actively managed, as an investor, you have to manage your own account online. So if you don’t know exactly what to expect, you might get frustrated.

However, the hilarious thing is, you can’t actually open an e-series account online. Aaaaand you can’t open one up at a TD Canada Trust branch either. Instead, you have to fill out a form and mail it in. The same thing goes for cashing out your funds – you can’t redeem your money at a branch or online – it all has to be done manually by filling out a form. This barrier and lack of customer service can make it frustrating for investors.

Here is what I’ve learned about the TD e-series mutual funds:

Open up a standard TD Mutual Fund account
Whether it’s a TFSA, RRSP, or non-registered account, you will be able to open this up at any TD Canada Trust branch. To make it less confusing, don’t tell the representative that you’re going to be converting it into an e-series account. Just open up a regular TD mutual funds account. Make sure you get your account number (you’ll need it to fill out your paperwork) as well as an online banking login number.

You will have to make an initial deposit to open up your account. I’m not actually sure if you *have* to, but I was forced to when I recently went in to open up a TFSA mutual fund account. I told the representative that I didn’t want to deposit any money into the account. But since he said I had to, I told him to transfer the minimum $25 deposit from my chequing account as a one-time transaction.

The representative you meet with will take you step-by-step through a required Investor Profile questionnaire to determine your risk-tolerance level. They will then most likely try to sell you into a mutual fund with a high MER (he tried to sell me into the Comfort Portfolio series). However, it will be easiest to deposit your money in a simple “placeholder” money market fund until you get your paperwork in order and set up with the e-series account.

Convert your account
Now that you’re set up with a mutual fund account, before you are allowed to purchase the e-series index funds, you will have to fill out a consent form, along with an application form (which will include your pre-authorized purchase plan information), and mail it in. You will not be able to fax it in, or return it to a branch.

It takes probably about 1-2 weeks for them to process your paperwork after they receive it. But you’ll have to log onto the TD Canada Trust website to see if your account has been converted over to e-series. I’ve heard of some people getting confirmation e-mails, but I never got one. So just check online every couple of days after you send off your application form.

Cashing out your e-series index funds
Because the e-series funds are self-directed, you will receive virtually no customer service support. In fact, TD Canada Trust mutual fund representatives do not have the capabilities within their computer system to make any sort of e-series transaction for you – whether it’s buying, selling, or trading.

The easiest way to take money out of your e-series account – whether it’s for the Life-Long Learning Plan (LLP) or Home Buyer’s Plan (HBP) – is to switch the amount you want to withdraw over to a non-e-series product, such as the money market fund. I learned this the hard way. Once it is in a regular mutual fund, any mutual fund representative will be able to help you fill out the appropriate paperwork to get funds out of your account.

For more information, you can check out the TD Canada Trust website where they have compiled a somewhat useful database of information on the TD e-series funds.

Does anyone else have any TD e-series mutual fund tips?

Monday 28th
No Spend Day!

Tuesday 29th
+ $150 freelance/side income
No Spend Day!

Wednesday 30th
No Spend Day! 

Thursday 1st
$41.49 groceries
$44.42 gas

Friday 2nd
No Spend Day! 

Saturday 3rd
$19.56 Five Guys Burgers

Sunday 4th
No Spend Day! 

WEEKLY EXPENSES: - $105.47
WEEKLY SIDE INCOME *: + $150

TOTAL: + $44.53

This week was relatively slow in both the money making and money spending department. My sister came over for the weekend with her boyfriend, and we all went to the Canucks game on Sunday night. I had a really good time, but this month I’m probably the busiest I’ve ever been in my entire life, so I couldn’t help but feel at least a little guilty for spending so much time out having fun, when I should have been working. But, in 3 weeks – once my secret projects are complete – I’ll be able to slow down and relax a little bit.

On the bright side, that’s 5 no-spend days this week. Good, eh? :)

* This is all income I bring in that is above and beyond my full-time job. Money is primarily made through my two blogs and my graphic design business.

Note: Today’s guest post is by Cait, who writes over at Blonde on a Budget. She is a 20-something who is blogging about her journey from being maxed out, to becoming a balanced and financially sound woman.

Once twenty-something’s reach a major milestone, like graduating from university or turning 25, they are hit with a number of questions. When are you going to get married? What part of town are you looking to buy in? And when are you going to have kids? Being single at 26, my answer to most of those questions is, “I need a boyfriend first.” But the part I leave out is the fact that I can’t afford one right now.

I’ve been single for just over three years and haven’t dated much since going back to school last year. In that time, I don’t think I’ve missed having a boyfriend once. This could be because my schedule hardly lets up enough for me to even have a social life, but the truth is I made a conscious decision to stay single until I finish school (July 2012). Today I want to share with you why.

I Know My Priorities
Right now, my life revolves around three things: finishing school, paying down debt, and building some savings. Do I think I couldn’t accomplish those things with a partner by my side? Of course not, but I physically can’t afford to risk giving less of my time to any of these priorities.

If you haven’t read my blog before, here’s where I tell you that I currently have $19,000 of debt. I’m almost proud of that number, considering it was $28,000 just over 6 months ago! But it’s still a big number and something I think about daily. Until the day comes where paying off debt isn’t my #1 priority, I can’t afford to add a boyfriend to the mix. (And really, who’s going to be attracted to -$19,000 anyway!?)

I Know My Budget
Krystal has written a couple of great posts on why it costs more to be single. Some of her points are completely valid, especially the one about paying double for essential living costs. But when you don’t have a significant other in the first place, it can cost a lot to get to the point where you would be splitting your bills in half.

For example, my current budget includes about $30/week for groceries and another $15-20 for take-out (including coffee). Since dating usually starts over a casual coffee or dinner, and eventually leads into spending the night and then going on vacation together, I need to be in a situation where I can afford to add dating to my budget. Owing $5,000 on a credit card makes it difficult to enjoy those indulgences, which leads me to the final reason I can’t afford to start dating yet.

I Know Myself
When I have a boyfriend, I’m that much more likely to overindulge. Having a partner in crime makes going to the movies and trying new restaurants that much more accessible. I also love giving random surprises to brighten my guy’s day. Unfortunately, I know I don’t have the extra dollars for surprises, birthdays, and Christmas gifts that are needed in a serious relationship.

Part of my journey from being an overindulging idiot to becoming a financially sound woman is changing both my spending and saving habits. If I were to start dating someone today, I can almost guarantee that I would go back to ignoring my budget and living beyond my means. I can’t afford to start dating until I can trust myself to make good decisions that won’t hurt my debt repayment plan.

With all of this being said, if a relationship fell into my lap tomorrow, I wouldn’t shoo it away. I want to start a life with someone, as much as the next person, I just can’t afford to look for it right now – at least not until I’m debt free. When I finish school next summer, I will have no student debt and hopefully no credit card debt. Maybe then I can start working on answering some of the questions every twenty-something is faced with.