Freebies for First-Time Home Buyers

Entering the housing market for the first time can be an intimidating task. It requires careful budgeting and likely some large sacrifices along the way. For young buyers (the average age of the first-time home buyer is 34), the money saved and put for a down payment will likely be the largest sum of money they’ve ever had to hand over. That’s why it’s important for first-time home buyers to realize that there are three different programs designed to reduce the cost or return money back to the buyer.

 

The RRSP Home Buyer’s Plan (HBP):
This program allows first-time home buyers to withdraw funds from their registered retirement savings plan (RRSPs) to pay for a home, without incurring the usual tax penalty. An individual is allowed to withdraw up to $25,000 from their RRSP, but must pay it back over 15 years. If that person is purchasing with a spouse, both the individual and the spouse may withdraw up to $25,000 each.

 

Land Transfer Tax (LTT) Rebate:
Most provincial governments in Canada levy land transfer taxes on individuals who buy or gain interest in property. Toronto is the only city charge a municipal land transfer tax in addition to the provincial LTT tax. Each government office governs their own land transfer tax, i.e. each province arranges the tax brackets and tax rate. To determine your tax amount, a land transfer tax calculator must be used. www.suganthan.ca/demo/calculators

 

The provinces of Ontario, British Columbia and Prince Edward Island, as well as the City of Toronto offer LTT rebates for first-time home buyers. For example, the land transfer tax on a $350,000 home in BC is equivalent to $5,000. However, for first-time buyers, the LTT rebate will negate the tax amount and return $5,000 back to the buyer.

 

First-time Home Buyers’ Tax Credit (HBTC):
The HBTC is a non-refundable tax credit for first-time home buyers and is worth $750. The first-time home buyers’ tax credit must be claimed on an income tax form no later than one year after the home is purchased.

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