First Time Home Buyer? You're in Luck!
You're in luck if you're a first time home buyer because unlike being a second or third - or however many time home buyer - first time home buyers are offered many incentives to help them save money. The Canadian government and the province of Ontario both have programs geered towards new home buyers. Since you can only take advantage of these programs the first time you buy a property (note - some programs do apply if you haven't owned in more than 5 yrs), if you're a first time buyer you should educate yourself on the various programs out there and make sure you are reaping all the benefits you can.
First Time Home Buyers Plan RRSP
The First Time Home Buyers RRSP Plan (HBP) allows first time home buyers to withdraw up to $25,000 from RRSPs to buy or build a home for yourself or for a related person with a disability. The withdrawn amount must be repaid within 15 years, subject to a minimum annual repayment that is 1/15 of the amount withdrawn. If the full $25,000 is withdrawn, the minimum annual repayment is $1,667. If less than the minimum is repaid in any particular year, the balance is added to the taxpayer’s income. If you are considering this incentive as an option for you, be sure to check with your financial institution to ensure that you can take the money out (are your RRSPs invested in non-redeemable GICs for instance?). Also, for you to take advantage of this program, the money has to be held in the RRSP for a minimum of 90 days prior to withdrawal. This means some foresight and planning may need to take part on your end. You don't want to have a closing date on your new purchase before you can withdraw the funds from your RRSP.
Want to know more about this program? Click here.
Ontario Land Transfer Tax Credit (up to $2000)
Land transfer tax is payable to the Province of Ontario at the time title transferred from Seller to Buyer. The Buyer is responsible for the payment of this tax. To assist new homeowners, the Province of Ontario offers a refund to a maximum of $2000. This allows first time home buyers to purchase a home up to $227,500 without having to pay any land transfer tax. If your purchase is greater than this amount than you will be responsible for a land transfer tax payment but will still receive a $2000 credit. In order to qualify, you must occupy the property - it cannot be purchased for rental income. The refund can be applied at the time of purchase if you notify the law office acting on your behalf, prior to closing. Want to calculate the cost of land transfer tax on your next purchase. Use this land transfer tax calculator.
Want to know more about this program. Click here.
Toronto Land Transfer Tax Rebate (up to $3725)
First time home buyers of a newly constructed or re-sale residential property qualify for the Toronto Land Transfer Tax Rebate. The maximum allowable rebate is $3,725.00. This allows first time home buyers in Toronto to purchase a home valued as high at $400,000 without having to pay a Toronto land transfer tax. Any additional amount above $400,000 will be taxed at a rate of 2%. The property must be owner occupied. If you are eligible for a rebate of all or a portion of the MLTT you owe, your lawyer will be able to claim the rebate at the time of closing.
Want to know more about this program? Click here.