Is there any government help for first time home buyers?
The federal government of Canada offers a variety of programs specifically for those jumping into real estate for the first time.
Is there any government help for first time home buyers? Yes, and it is more than a homeownership incentive. It is a way for you to save money when you are buying a home. The federal government of Canada offers a variety of programs specifically for those jumping into real estate for the first time.
First time home buyers qualify for the programs and persons with disabilities, don't even need to be a first-time home buyer. As long as the home is accessible and the main place of residence, you can gain access to government assistance.
Here is what you need to know about the programs and how to qualify:
The Home Buyer's Plan (HBP)
To help you pay your down payment, you can use the Home Buyer's Plan to borrow up to $25,000 tax-free from your Registered Retirement Savings Plan (RRSP).
To withdraw the money, you need to fill in a request for each withdrawal that you make. The money should be in your account for 90 days before you purchase the property.
There is still a catch. This money is not a free giveaway. Your early RRSP withdrawal is not taxable income. A loan would be a more accurate word to describe it. Why? Because you have to repay the amount in 15 years.
Repayment has to start two years after you withdraw the funds. The HBP repayments are made by making contributions to your RRSPs and they have to start two years after you withdraw the funds.
The Canadian Revenue Agency (CRA) will keep track of your debt and send you a statement of account year to remind you of the remaining balance, or you can always view it in your CRA online account. And don't forget to fill in the income tax and benefit return!
To qualify you not only need to be a first-time home buyer, but you need to already have a written agreement to purchase or build a home for yourself. The home has to be your principal place of residence.
First-time Home Buyers Tax Credit (FTHB)
Being a new homeowner can get more tax benefits. Introduced in 2009, this program is meant you to recover some of the money used in the purchase. A good opportunity once you consider the closing costs like home inspections and lawyer's fees.
You can claim $5,000 for purchasing a qualified home. A qualified home can be an existing home or even one under construction, but it must be registered to you or your spouse. To claim it, just enter the amount on line 369 on your Schedule 1, Federal Tax.
Always be careful at how much you are claiming. If you are buying the house with someone else (like your spouse), the total amount cannot exceed $5,000 between the two. And keep all your documents related to your home purchasing! Just in case the CRA comes knocking at your door.
GST/HST New Housing Rebate
Any purchase you make is subject to tax, and a house is not an exemption. But you can recover some of the money.
The GST/HST New Housing Rebate allows you to get back some of goods and services tax (GST) or some of the harmonized sales tax (HST).
You can qualify if you are buying a new property, constructing a newly constructed home or a substantially renovated property (so renovated it can be considered new). It could be a house, a condo, a duplex or even a mobile home!
Every original invoice from your purchase should be kept for six years. No photocopies, slips or account statements. The CRA might need to the original in case they review your taxes.
Land Transfer Tax Rebate
When you buy a home, there is one more tax you have to pay other than the GST/HST. Once it's official that you acquired land, the province will charge a land transfer tax. Normally, they are the payment is arranged by your real estate lawyer on closing day. The tax will be based on how much you paid for the property.
If you haven't owned any land or property before, you claim the tax! The only other condition is that you have to live in a certain province. Not every resident in Canada gets to rebate the tax. If you live in British Columbia, Ontario or Prince Edward Island, consider yourself lucky because you are eligible for the refund of all or a part of it as long as it doesn't go above the maximum amount allowed by your province. And the refund can be immediate if you register on time! Check your province's website for more information.
It is always good to be aware of assistance for first-time home buyers. These programs not only take some of the burdens off, but they can also even help you achieve homeownership.