Buying a home for the first time can be both exciting and an costly investment. It’s a big decision, but being a first-time buyer also has its advantages. Here are a few of them:
- Home Buyer Tax Credit (HBTC)
- Ontario Land Transfer Tax Credit
- RRSP Home Buyers Plan
- Toronto Municipal Land Transfer Tax Credit
Let’s explore each a little further.
Home Buyer Tax Credit (HBTC)
With the HBTC you can be eligible to receive up to $750 cashback when filing your tax return for the year you purchased your home. This tax credit is issued by the federal government, and all you have to do in complete line 369 on your income tax return.
To qualify for the Home Buyer Tax Credit:
- You, or your spouse must have purchased a qualifying home, and
- You did not live in another home in the same year of your newly purchased home, or four years prior to your new purchase
If you purchased your home with a spouse, first you’ll have to decide which one of you will claim the HBTC, or if you’ll share the HBTC. Be sure that your claims combined do not exceed the maximum allowable amount of $750.
First-Time Home Buyers Ontario Land Transfer Tax Credit
As a first-time buyer you will receive a credit or rebate which is costed to the province of Ontario for your Land Transfer Tax. The maximum you can receive for this credit is up to $2,000. If your home is $227,500 or less, this means it that you can essentially buy your first home without paying any fees to transfer the land. Any amount over and above this will be taxed at about 1.5 percent.
To qualify for the Ontario Land Transfer Tax Credit:
- You as the owner, must be residing in the property
- You must be a first-time buyer, without previous interest in another home (worldwide)
You can get an instant refund if you speak to your real estate lawyer before your closing date.
Be advised, you may experience a refund reduction if you, your spouse, or common law partner are not a first-time buyer.
First Time Home Buyers RRSP Plan (HBP)
The First Time Home Buyers RRSP Plan (HBP) enables first-time buyers to withdraw up to $25,000 from RRSPs. The intention is to build or buy a home, for a relative with a disability. The amount withdrawn comes with a 15 year repayment period, but the minimum annual repayment would be 1/15 of the withdrawn amount. For instance, should you use the entire $25,000, your minimum annual payment would be approximately $1,670. Should you pay less than the stated minimum within these 15 years, the balance would be added to your income.
In order to qualify for the HBP, you cannot be a homeowner in the previous 4 years.
GST/HST New Housing Rebate
If you’ve purchased a home that has been newly built or plan on building your own home, you’ll be required to pay HST or GST on the purchase price. As such, you’ll also qualify for a housing rebate.
The housing rebate is 36% of the GST/HST that all Canadian buyers pay, for a rebate of up to $6,300.
To qualify for the GST/HST New Housing Rebate:
- Your home must have a fair market value of less than $350,000 – If your home is slightly over this about a partial rebate can still be issued so long as your home’s market value doesn’t exceed $450,000
- You have bought a new or majorly renovated home dwelling from a builder, or have a purchase shared interest in a co-op home
- You need to be an individual homebuyer (corporations/businesses are not eligible)
- You must reside in the home primarily
For more information about first-time buyer programs, rebates and tax credits speak to a financial professional today. Contact Us.