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Looking to buy your first home and wondering what first time home buyer programs are available? We’ve got the lowdown for you!

Buying your first home is an exciting yet nerve-wracking time. The amount of money involved in such a purchase is often difficult to fathom, let alone part with. Aside from the sale price of the home, you also have to contend with others costs. These include land transfer tax and lawyer fees, just to name a couple. Thankfully, there are several first time home buyer programs available to help soften the blow.

On this page, you’ll find everything you need to know about the savings available to first time buyers in Ontario. Let’s jump in!

Ontario Land Transfer Tax Refund

Property purchases within Ontario are subject to Land Transfer Tax (LTT). The amount due ranges from 0.5% – 2% of the sale price, depending on that price. However, if you’re a first time home buyer, you’re most likely eligible for a refund of part or all of the tax. As of January 2017, the maximum amount of the refund is $4,000.

The only criteria are that you must be 18 years of age and cannot have owned a house anywhere in the world, even if it was gifted or inherited. Also, if you have a spouse, they cannot have owned a home while they were your spouse.

Toronto Municipal Land Transfer Tax Rebate

Unfortunately, buyers in Toronto (which of course includes Etobicoke) also have to pay the Toronto Municipal LTT. This figure is usually around the same as the provincial tax, so Toronto buyers end up paying double. Thankfully, as a first time buyer, you’re likely to be eligible for a refund on this tax as well. As of March 2017, the maximum rebate available is $4,475.

The criteria, as detailed on the City of Toronto website are the following:

“The definition of a first-time purchaser is:

  • The purchaser is at least 18 years of age.
  • The purchaser must occupy the home as their principal residence no later than nine months after the date of the conveyance or disposition.
  • The purchaser cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time.
  • If the purchaser has a spouse, the spouse cannot have owned a home, nor had any ownership interest in a home, anywhere in the world while they were the purchaser’s spouse. If this is not the case, no rebate is available to either spouse.
  • The purchaser is a Canadian citizen or permanent resident of Canada. If the purchaser becomes a Canadian citizen or permanent resident within 18 months of the transfer, they may apply for and may qualify for the rebate.”

Home Buyer’s Plan

The Home Buyer’s Plan (HBP) is a government incentive to help first time buyers with their down payments. It allows you to withdraw up to $25,000 in a calendar year from your Registered Retirement Savings Plans (RRSPs) to use to buy or build a house. This means couples purchasing their first home together can withdraw up to $50,000 to put towards their down payment.

The criteria for being a first time home buyer are slightly different in this case. The main difference is they only take into account the past four years. If you were the owner of a home prior to that period, but not during, you could still qualify as a first time buyer.

It should be noted that the major condition on this incentive is that it must be paid back over a 15-year period. Any year that you don’t repay at least one-fifteenth of the amount borrowed, you’ll have to add the unpaid amount to your annual taxable income.

First-Time Homebuyer’s Tax Credit

The Homebuyer’s Tax Credit (HBTC) is offered by the government to first time home buyers. Similar to the HBP, you qualify for this incentive if you haven’t owned a home in the last four years. The amount of the credit is a specific percentage of $5,000. The percentage used is the lowest personal income tax rate for the year. For example, if that rate is 15% the credit will be $750.

GST/HST New Housing Rebate

The New Housing Rebate is another incentive from the federal government. It’s open to residents of provinces that have combined federal and provincial sales tax. These include British Columbia, New Brunswick, Newfoundland, Nova Scotia, and Ontario.

Rebate amounts are variable and to qualify, as per the Government of Canada website, you must meet the following criteria:

“You may be eligible for a new housing rebate for some of the GST/HST paid if you are an individual who:

  • purchased new housing or constructed or substantially renovated housing, which could include housing on leased land (if the lease is for at least 20 years or gives you the option to buy the land), for use as your (or your relation’s) primary place of residence
  • purchased shares in a co-operative housing (co-op) complex for the purpose of using a unit in the co-op for use as your (or your relation’s) primary place of residence
  • constructed or substantially renovated your own home, or hired someone else to construct or substantially renovate your home for use as your (or your relation’s) primary place of residence and the fair market value of the house when the construction is substantially completed is less than $450,000

Qualifying housing also includes mobile homes (including modular homes) and floating homes. For mobile and floating homes, you may have the option to treat your mobile or floating home as a purchased home or as an owner-built home when claiming your new housing rebate.”

Wrapping Up

As you can see, there are ways to drastically cut down on the additional costs associated with buying a home. A good realtor can guide you through every step of the purchase, including showing you where you can save. What’s more, hiring the right realtor to help you will also ensure you get a good price for the property. We can make the process of buying your first home more exciting and less terrifying!

If you’re thinking of buying, we’re here to help! Get in touch with us today!

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