Buying a home requires a significant investment of time and money. In fact, it’s likely to be the single largest purchase you’ll make, so most buyers want to take advantage of any saving-money opportunities they can. Several government programs and tax credits are available to first-time buyers and/or repeat buyers. Here’s a look at several options for first-time buyers:
- First-Time Home Buyers’ Tax Credit (HBTC): If you’re buying your first home, then you’ll want to read up on this tax credit offered by CRA. The amount of the credit you can get is equal to the lowest personal income tax rate (15 per cent) multiplied by $5,000, so the highest possible credit you could claim is $750.
- RRSP Home Buyers’ Plan (HBP): HBP allows you to withdraw up to $25,000 (or $50,000 for a couple) from a Registered Retirement Savings Plan (RRSP) to fund your down payment. With this program, you have 15 years to repay the withdrawn amount in full, and you must pay back at least 1/15 of the amount you withdraw each year or face tax penalties.
- BC First-Time Home Buyer Transfer Tax Exemption: First-time buyers in BC may qualify for a reduction or elimination of property transfer taxes. To qualify, you must be a Canadian citizen or permanent resident and must have never owned an interest in a principal residence anywhere in the world at any time. If you’re buying with someone who has owned real estate in the past, you could structure the deal so that you initially own a larger share of the property to maximize your exemption (for instance, you could own 99 per cent, while your spouse owns 1 per cent and you change to 50/50 ownership later on).
Your accountant, tax preparer or real estate lawyer can be a good source of information on these programs if you’re unsure of whether you qualify.
In addition to the first-time buyer programs listed above, Canada has a number of programs that might apply to first-time buyers or step-up buyers alike:
- GST/HST New Housing Rebate: For new homes priced below $350,000, the GST/HST Rebate reduces the GST or the federal part of the HST (whichever applies in your province) from 5 to 3.5 per cent. If you’re purchasing a new home that costs between $350,000 and $450,000, you may qualify for a smaller rebate. This rebate is also available if you’re rebuilding a home destroyed by fire.
- CMHC Green Home Program: If you insure the purchase of an energy-efficient home through CMHC or make energy-saving renovations to the home you’re purchasing, you may qualify for a 10 per cent refund on your mortgage insurance premium.