There are
more expenses than you might think involved with purchasing your first house.
Buying a home includes much more than just saving for a down payment because of
moving costs, legal fees, inspections, and taxes. First-time purchasers
frequently neglect to budget for these charges and then experience sticker
shock as the additional prices increase.
Thankfully,
there are programmes available exclusively to first-time home purchasers in
Canada that can help with some of the costs. There are many programmes
available to assist potential house purchasers on their path to homeownership,
including from rebates to tax credits.
Here, we
give you the scoop on five first -time home buyer programs in Canada you can
apply for when you’re ready to make the leap into homeownership.
The Home
Buyer’s Plan (HBP)
The federal
program through the Canadian Revenue Agency lets you withdraw up to $35,000
tax-free from your registered retirement saving plan (RRSP) as a loan to build
or buy your first home.
In order to
qualify for the HBP, you must be a first-time home buyer, have an agreement to
buy or build, and intend to live in the qualifying home as your principal
residence within one year after purchase or when the residence becomes
habitable. You can make a single withdrawal from your RRSP or several within
the same calendar year.
You must pay
back the HBP loan within a 15-year period to avoid penalties, starting the second
year after the funds are first withdrawn.
GST/HST Housing
Rebate
Targeted
specifically at Canadians buying a new construction property, the GST/HST new
housing rebate allows you to recoup some of your tax expenses.
To be
eligible, you’ll need to have purchased or built a new home, or substantially
renovated your own existing home that has a fair market value under $450,000
once construction is complete. The property must be your primary place of
residence. Floating and mobile homes are also eligible, as well as land that is
leased for at least 20 years.
When you’ve
applied for your tax rebate, be sure to keep a copy of the completed forms,
original invoices and all other documents for up to six years.
The First
Time Home Buyer Incentive
Overseen by
the Canada Mortgage and Housing Corporation (CMHC), this buyer incentive
program aims to reduce monthly payment using a shared-equity mortgage with the
federal government.
New buyers
can claim five or 10% of the property’s purchase price to put toward a down
payment. Within a 25-year period, or when the home is sold, the same
percent-age value of the home is paid back. The homeowner can also pay back the
incentive in full at any time.
For the
purchase of a resale property or mobile home, buyers can take a 5% incentive.
If buying a new construction home, purchasers can take five or 10%.
To be eligible
for the First-Time Home Buyer Incentive, your house-hold income must not exceed
$120,000, your total borrowing can not be more than four times your qualifying
income, and you must meet minimum down payment requirements.
The Home
Buyer’s Tax Credit (HBTC)
If you’re a
first-time home buyer with a qualifying home you could receive up to $5,000 of
the purchase from the Home Buyer’s Tax Credit (HBTC).
A qualifying
home falls under most residential structure types, including single-family,
semi-detached, condo-minium and townhouse properties that are complete or under
construction. Shares in a housing cooperative granting you the right of
ownership also apply. However, for any of these property types, you must intend
to occupy the home as your primary residence no later than one year after purchase.
To file for
the rebate, simply enter $5,000 on line 31270 of your tax return. If you’re applying
for the rebate with a spouse, you can split the rebate between the two returns
without exceeding the $5,000 limit.
Land
Transfer Tax Rebates
In Ontario,
British Columbia and Prince Edward Island, first time home buyers can receive a
reduction on their land transfer taxes. Land transfer taxes are paid when the
transaction close and are based on the purchase price.
For Ontario
buyers, rebates can be claimed from both the province and the City of Toronto,
if applicable. Resale and new construction properties in Toronto could offer a
rebate valued up to $4,475, so long as the applicant is a Canadian citizen or
permanent residence of Canada, and the property will be lived in within nine months
of purchase. For homes priced more than $400,000, buyers can still claim the
maximum rebate but will need to pay the remainder of the land transfer tax.
Province
wide, Ontarians can receive a rebate up to $4,000, covering the full tax amount
for homes priced at $368,333 and under. Similar to Toronto, homes priced more
than $368,333 can still receive the entire rebate, but the buyer will need to
pay the balance of the tax.
In British
Columbia, buyers can receive $8,000 in rebates, earning the full amount up to a
$500,000 maximum purchase price. Between $500,001 and $524,999, only a partial
rebate is given, and there is no rebate for prices above $525,000.
Buyers in
Price Edward Island could receive up to $2,000, covering the full land transfer
tax amount up to $200,000. If purchased for ore than $200,000, the property is
not eligible for the rebate.
Source: REALTOR.CA
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