If you’re pondering that first home purchase, it’s a great time to take the plunge. Mortgage interest rates are still at very low levels, and there are government incentives that can give you that financial boost you need to rocket into the real estate market. Here are some of the most popular programs for Canadian first-time homebuyers that you need to know about:
This (new!) incentive program starting September 2019 is offered through the federal government’s National Housing Strategy and its goal is to address housing affordability by offering first time home buyers a ‘shared equity’ loan. The basic guidelines are as such: Your total household income must be $120,000 or less, and the prospective home must be $480,000 or less. If you qualify, you can receive a loan of up to 5% or 10% (depending on new vs. resale homes), which must be paid back when the house sells, or within 25 years, whichever comes first. There is no interest or fees to be paid on this loan, but you do have to pay it back based on 5% or 10% of the selling price, not the price you paid when you first purchased the home.
Here’s an example:
If you receive $20,000 (5%) on a $400,000 home, if it sells later for $500,000, you will have to pay back $25,000, not the original $20,000.
- HBP: The RRSP Home-Buyers Plan
The Home Buyer’s Plan (HBP) is another incentive offered through the federal government to support first-time buyers. It enables them to access a portion of their Registered Retirement Savings Plan – RRSPs – to use towards their home purchase. Individuals can take out up to $35,000 (or $70,000 per couple) of their RRSPs tax-free, with the contracted agreement that they will pay back into it within 15 years.
- The First Time Home Buyer Tax Credit
Just as the name implies, this home buyer’s tax credit will offset a portion of the many expenses involved when buying a new home. While this isn’t a rebate or up-front loan, eligible first-time homebuyers can claim up to $5000 on their income tax returns within a year of buying their home. This could end up saving them several hundred dollars through income tax relief.
- Land Transfer Tax Refund
Depending on the purchase price of your home and the related land transfer taxes, you may qualify for the Land Transfer Tax Refund offered through the provincial government. The maximum rebate for eligible buyers is $4,000 which may cover all or part of the land transfer taxes owed.
- GST/HST New Housing Rebate
If you are buying a newly-built home and you’re a first-time home-buyer, then there’s another rebate you may be interested to learn more about. The GST/HST New Housing Rebate can help you save some of those hefty taxes for new builds, or homes with ‘substantial’ renovations.
These are some of the top rebates and financial incentives that can help you finally break into that housing market and own your own home. Each of these have specific qualifying rules so be sure to find out if you’re eligible first. Funding for these programs can come and go rather quickly, so if you’re in the market to buy, apply early. Your first home purchase is a big step, but an exciting one! When you work with experienced professionals however, the whole process will run that much more smoothly. Your bank or lender, your Realtor and your real estate lawyer are all there with the information and guidance you need. Here at Ares Law, our speciality is real estate law, and we’ll keep you informed every step of the way. This includes letting you know about financial incentives you may qualify for. Connect with us today if you are in the market to buy a home in the greater Parry Sound or MacTier area; we’re the pros you need on your side – 705-746-6444.
