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There are 4 main programs and rebates including what they are, who is eligible, what happens after you qualify and tips on how to get the most out of them. We’ve also included some examples on how to calculate how much you’d be able to qualify for.
RRSP Home Buyer’s Plan (HBP)
First-Time Home Buyer Incentive (FTHBI)
First-Time Home Buyers’ Tax Credit
Provincial and Municipal Land Transfer Tax (LTT) Rebates
The federal Home Buyers’ Plan (HBP) allows qualified first-time buyers to withdraw up to $35,000 each, tax-free, from their RRSPs. If two partners buy together, they can access up to $70,000 of RRSP savings, tax-free.
To qualify, you must:
Tip: You may be able to participate in the HBP even if you do not meet the first-time home buyer requirement if you live separately from your spouse or common-law partner for at least 90 days due to a breakdown in your marriage or common-law partnership.
Tip: If you don’t make the annual payment, it will be included as taxable income on that year’s tax return.
A federal program launched in 2019, the First-Time Home Buyer Incentive (FTHBI) offers a 5% or 10% contribution towards your down payment in the form of a shared equity loan from the Government of Canada.
Incentive amount for first-time buyers:
The Incentive must be repaid after 25 years, or when the property is sold, whichever comes first. Before then, the homebuyer is allowed to repay the full amount without a prepayment penalty; partial payments are not permitted.
Tip: The amount due is based on the market value of the property at the time of repayment. If the buyer received a 5% Incentive they would repay 5% of the home’s value at the time of the repayment.
The federal First-Time Home Buyers’ Tax Credit (or the Home Buyers’ Amount) offers a $5,000 non-refundable income tax credit amount on a qualifying home, resulting in a credit of up to $750.
To qualify, you must:
Be a Canadian resident
Be considered a first-time homebuyer
Not have owned a home within the past 4 years
Not have lived in a home that your spouse owned, if you are buying together
Present documents supporting the purchase of your home
Intend on living in the home within one year of purchasing
Your home must also meet the following criteria:
Be a new or resale home in Canada
Be registered in your name or in your spouse’s name
Be a detached, semi-detached, townhouse, mobile home, condo, or apartment
To receive your credit, you must claim it in your personal income tax return.
Tip: The claim must also be filed in the same year that you purchase your home. For example, if you purchase the home in 2020, then the claim must be filed in 2021 when completing your tax return for 2020.
Land transfer tax rates are tiered, marginal tax rates based on the home’s purchase price. Anyone who buys a house, condominium or land in Ontario, is subjected to provincial land transfer tax, which is due on closing day. As a first-time homebuyer in Ontario, you may be eligible to receive a LTT rebate for your purchase.
Tip: Buyers in the City of Toronto are subject to an additional municipal land transfer tax; however, they may also qualify for a rebate on the municipal LTT of up to $4,475.
To qualify, you must:
Sample calculation for a home purchase of $350,000 in Ontario:
CalculationOntario LTT rateOntario LTTLTT on first $55,0000.5%$275LTT on $55,000 to $250,0001.0%$1,950LTT on $250,000 to $350,0001.5%$1,500LTT due (before rebate)$3,725Less: Ontario rebate($3,725)Total LTT due (after rebate)$0
With a better understanding of the first-time buyer programs and rebates available, you’ll be able to confidently budget for your dream home.
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