WHAT EVERY FIRST-TIME HOME BUYER SHOULD KNOW !
Monday May 29th, 2017
Buying your first home can be both exciting and stressful at the same time. It’s also very expensive. You’ll need to start saving for a down payment and the costs that go along with purchasing a home.
If you don’t think you’ll be able to afford a home, the federal government offers a variety of incentives for first-time homebuyers. Read the pages below to find out more about the tax credits and rebates, grants, and programs available to you.
First-Time Home Buyers Tax Credit
The First-time Home Buyers Tax Credit was introduced as part of 'Canada's Economic Action Plan' to assist Canadians in purchasing their first home. It is designed to help recover closing costs such as legal expenses, inspections, and land transfer taxes.
The Home Buyers' Tax Credit, at current taxation rates, works out to a rebate of $750 for all first-time buyers. After you buy your first home, the credit must be claimed within the year of purchase and it is non-refundable. In addition, the home you purchase must be a 'qualified' home, described in more detail below. If you are purchasing a home with a spouse, partner or friend, the combined claim cannot exceed $750.(Reference#1)
To receive your $750 claim, you must include it with your personal tax return under line 369.(Reference#2)
See Reference bellow at the end
RRSP Home Buyers' Plan
One great source of funding for your mortgage down payment is a Registered Retirement Savings Plan (RRSP). The Canadian government's Home Buyers' Plan (HBP) allows first time home buyers to borrow up to $25,000 from your RRSP for a down payment, tax-free. If you're purchasing with someone who is also a first time homebuyer, you can both access $25,000 from your RRSP for a combined total of $50,000. However, since the HBP is considered a loan, it must be repaid within 15 years. Source:How Home Buyer Plan works http://www.cra-arc.gc.ca/hbp/
First-Time Homebuyer Eligibility
In order to be eligible as a first-time homebuyer, you must meet the following criteria1:
- - RRSP funds you borrow must be in your account for at least 90 days prior to withdrawal
- - You cannot have owned a home within the previous four years
- - If you're buying with a spouse (or common law partner) who is not a first time homebuyer, you cannot have lived in a house they owned for 4 years
- - You have entered into a written agreement to buy or build a qualifying home
- - You mush intend to live in the home within one year of purchase as your primary residence
- - If you have used the Home Buyers' Plan before, you cannot have any outstanding balance due
- - You must make the withdrawal from your RRSP within 30 days of taking title of the home
- - You must be a Canadian resident
If you make a withdrawal from your RRSP, but do not meet the first-time homebuyer eligibility requirements, this withdrawal will be taxed and you must include it in your income tax statement as taxable income.
Land Transfer Tax Rebate
In some provinces and cities, there is a rebate available to help first-time homebuyers offset the cost of their land transfer tax. If you qualify, land transfer tax rebates are available to first-time homebuyers in the provinces of Ontario, British Columbia, and Prince Edward Island. There is also a land transfer tax rebate available for first-time homebuyers in the city of Toronto.
Ontario Land Transfer Tax Rebate
First-time homebuyers in Ontario can qualify for a rebate equal to the full amount of their land transfer tax, up to a maximum of $4,000.
To qualify for the Ontario Land Transfer Tax Refund for First-Time Homebuyers, you must meet the following criteria:
- - You must be 18 years of age or older,
- - You must live in the home within 9 months of purchasing it,
- - You cannot have owned a home before,and If you have a spouse,they cannot have owned a home during the time they have been your spouse.
Based on the Ontario land transfer tax rates, the rebate will cover the full tax amount up to a maximum home purchase price of $368,250. For homes with purchase prices over $368,250, homebuyers will qualify for the maximum rebate, but will still owe the remainder of their land transfer tax. If you are buying your home with your spouse, but only one of you qualifies for this rebate, you can still receive 50% of the rebate.
If you qualify, your real estate lawyer will help you file the necessary paperwork. You can either file for your land transfer tax rebate electronically, or download the Ontario Land Transfer Tax Refund Affidavit for First-Time Purchasers of Eligible Homes here. For more information, visit the Land Transfer Tax Refund for First-Time Homebuyers website.
Toronto Land Trasfer Tax Rebate
First-time homebuyers in who live in the City of Toronto can qualify for a rebate equal to the full amount of their municipal land transfer tax, up to a maximum of $3,725. You can also qualify for the Ontario rebate in addition to the Toronto rebate.visit the Municipal Land Transfer Tax Rebate website.
GST/HST New Housing Rebate
This rebate helps Canadians who paid GST or HST by either buying a new home, renovating an existing one, or rebuilding one that was lost to fire. To qualify for this rebate, the home must be your primary residence. It’s also available to people who have purchased a mobile, floating, or modular home.
All Canadians who qualify are eligible to receive the GST portion of the new housing rebate. This reflects the fact that the GST is collected by the federal government. In addition, Ontario offer rebates on the provincial portion of the HST paid by individuals who have either renovated a home or purchased a new one.
References and Notes
- 2009 First Time Home buyer's Tax Credit, Stephen H. Shub Professional Corporation, 2008-01-01
- Fact Sheet: First Time Home buyer's Tax Credit, Canada Revenue Agency, 2010-02-25
- The First-Time Home buyer's Tax Credit, Meredith Norton - Remax Shuawap Realty, 2009-02-26
- If you are working with a realtor your realtor should help you step by step in the process of buying your home. say's RAJ SHARMA.
Not intended to solicit properties currently listed for sale or individuals currently under contract with a Brokerage.
Information is deemed to be correct but not guaranteed.
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