As a first-time home buyer, you’ll want to take advantage of various grants offered by various levels of government that will help make purchasing a home more affordable. Here are the key grants available to you if you’re buying a home for the first time:
The Home Buyers’ Tax Credit, at current taxation rates, works out to a rebate of $750 for all first-time buyers. After you buy your first home, the credit must be claimed within the year of purchase and it is non-refundable. In addition, the home you purchase must be a ‘qualified’ home, described in more detail below. If you are purchasing a home with a spouse, partner or friend, the combined claim cannot exceed $750.
To receive your $750 claim, you must include it with your personal tax return under line 369.
First-Time Home Buyer’s Tax Credit
This grant was introduced by the federal government in the 2009 federal budget. It allows first-time buyers to recover some of the costs associated with their purchase, such as legal fees, land transfer taxes, and home inspections. At current tax rates, the non-refundable credit is worth roughly $750 for anyone able to take advantage of it.
In order to be eligible for the credit, you must meet certain requirements. First, for your property to qualify it must be a new or existing home in Canada. Virtually all types of homes (detached, semi-detached, mobile home, condo, etc.), are acceptable. You must have the intention of residing in the home within one year of purchase.
To claim the tax credit, it must be registered in your name or your spouse’s name. In addition, you can’t have owned a home within the prior four years or have lived in a home owned by your spouse within that same timeframe. Finally, you must have documentation of your purchase.
Land Transfer Tax Rebate
If you live in certain provinces or cities, you’re eligible for a rebate on some of the land transfer tax you paid when purchasing your house. The amount of the rebate varies depending on where you live. Land transfer tax rebates are available in Ontario, British Columbia, and Prince Edward Island. The City of Toronto also offers a land transfer tax rebate to first-time buyers. You may receive this in addition to the rebate available to those in Ontario.
RRSP Home Buyer’s Plan
Normally, any amount you withdraw from your RRSP is considered taxable income However, the government allows you to borrow up to $25,000 from your RRSP to help pay for your home as long as you qualify as a first-time buyer. In order to meet this requirement, you must not have purchased a home within the last four years or also not have lived in a home owned by your spouse during this time.
Importantly, any funds borrowed from your RRSP for your down payment must be repaid. These repayments must begin two years after your purchase and you have up to 15 years to make these payments.
GST/HST New Housing Rebate
This rebate helps Canadians who paid GST or HST by either buying a new home, renovating an existing one, or rebuilding one that was lost to fire. To qualify for this rebate, the home must be your primary residence. It’s also available to people who have purchased a mobile, floating, or modular home.
All Canadians who qualify are eligible to receive the GST portion of the new housing rebate. This reflects the fact that the GST is collected by the federal government. In addition, Ontario offer rebates on the provincial portion of the HST paid by individuals who have either renovated a home or purchased a new one.