Great Programs, Rebates and Tax Credits for First-Time Home Buyers

First Time Home Buyer Krishna Menon 30 Aug

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 The amount withdrawn comes with a 15 year repayment period, but the minimum annual repayment would be 1/15 of the withdrawn amount.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.

Buying a Home: The Hidden Costs

General Krishna Menon 15 Aug

As a first-time buyer you need to gain knowledge before you can be ready to buy a home if you don’t want to miss out on the critical saving costs associated with your purchase. Just because you have the down payment minimum requirement and you’ve pre-approved doesn’t mean you’re ready to jump in with both feet just yet.


New homeowners can save on:


  • Appraisal costs
  • HST, on the purchase price
  • HST, CMHC premiums
  • Land transfer tax and rebates
  • Legal Fees


When purchasing a home in Ontario, you’ll be required to pay provincial tax to transfer the land of the new property you’ve bought. You may also need to pay land transfer tax to your municipality (the city you live in). Depending on the purchase price of the property, these amounts can vary.


All land transfer taxes are due upon the closing of your new home, but they are initially included in your down payment requirement. Your real estate lawyer will pay these amounts for you during the closing, so you don’t need to worry about them. What you do need to consider is the actual cost of these taxes. For instance, if you’re buying a home for $400,000 in the GTA, you could be looking at about $10,000 to cover these costs. We don’t want you to be caught off guard, so plan ahead.


Although $10,000 is a lot of money, what you might not know is that as a first-time homebuyer you may be able to recover up to half of this money back. You’re eligible for a land transfer tax rebate of up to $2,000 from the province of Ontario, as well as a land transfer tax rebate from the city or municipality of up to $3,725.


Setting Up Basic Accounts

For first-time buyers who are moving from a rental unit into a new home you’ll have to set up all of your new utility accounts at your new address before the move. With any new account comes account setup fees, and in some cases deposits. Some of the account you’ll need to set up are:


  • Homeowners’ insurance
  • Gas
  • Hydro
  • Oil
  • Water


New hydro accounts come with a mandatory set-up fee. Other companies such as gas companies charge deposits, however you may have the option to waive the deposit fee if you sign up for pre-authorized payments.


For all account set-up fees and deposits combined you could be looking at approximately $1,000 in additional costs within the first 30 days after the sale closes. To get an accurate estimate, we’d strongly encourage you to contact your service providers in advance. Also, don’t forget to inquire about alternative options for waiving deposit amounts.


Are you interested in learning more about your expected costs of your potential purchase, or seeking professional financial assistance? Our mortgage experts are available when you need someone you can trust. Save from day one and consult with us today.


Mortgage Tips Krishna Menon 9 Aug

For businesses large and small, a loan may be needed to overcome financial distress, purchase real estate, or acquire equipment to make their jobs easier. Business loans come in all sizes and for use in every aspect of business. Depending upon the size, age, and niche of your business, you can find available funding for every financial need that you can think of. The problem isn’t the availability of funding, it is the turndown rate of traditional banks that makes obtaining these loans so difficult. Businesses which have been turned down for a loan by a traditional bank often meet their ultimate end through failure. This is because business owners and representatives do not realize that alternative lending options exist and that they are easier to obtain than you may think.

What is Alternative Funding?

Dominion Lending Centres Leasing provides financing options for businesses who have been turned down for a traditional loan or for businesses that do not meet the requirements for a traditional loan. DLC Leasing matches businesses with lenders and investors within their network to provide funding outside of the traditional finance institutions. Brokers will assist business owners in finding the right loans to suit their needs and they will help with the application process as well.

Alternative funding is often grouped into specific niches. Lenders and investors will provide funding for certain needs rather than generalized financing. One lender may choose to provide funding for businesses which are in the construction field while another may choose to provide funding to businesses in retail or food service. This choice will often reflect the resources and network of the lender and will give the borrower a greater picture of where the money is coming from.

What Type of Loan Do You Need?

Every business is different and the needs of those businesses vary just as much. Where one company needs funding to pay for employee wages or utility bills, another may be looking for funding to purchase another location. The size of your business will be a determining factor for the amount of funding that you can receive. A larger business, with more income, will receive a larger loan where a small business will receive a lesser amount. Besides the size of your business, your loan broker will need to see detailed financial records, copies of your tax statements, and may even need to evaluate your accounts receivable.

When applying for a loan of any size, it is important to know what type of loan you need ahead of time. Here is an example of some of the most popular business loans available:

Equipment loan – Funds are used to purchase equipment for business use. Either to replace old equipment or to upgrade to more modern equipment. This can be used for large machinery and production equipment as well as office and restaurant equipment.
Real Estate loan – This type of loan is used to purchase real estate for business use. It cannot be used for personal real estate and will likely be calculated based on the business income.
Hard Money loan – Typically secured by real property and are often a few months to only a few years in length. Hard money loans provide funding to assist in a temporary financial situation or while your business is waiting for long-term financing to be approved
Accounts Receivable loan – The amount of this loan is based on your current accounts receivable and can usually be used for any financial needs of your business. This type of loan provides funding to help you get through financial distress because of money that you are waiting to receive.
Once you have decided the type of loan that your business needs, you will need to find a reliable, honest and knowledgeable commercial finance broker to work with. Research your broker to make sure that you are protected throughout the entire process.