5 Possible Rebates and Credits for First Time Homebuyers
Thursday Oct 01st, 2020
As a first time home buyer, do you know what possible rebates and credits you are eligible for when buying your first home? This article explores the different programs that can help you land your dream home.
Buying a house for the first time is one of the largest, if not, biggest purchases in an adult’s life. Before reaching this decision, you should do most of your due diligence and homework to realistically afford a property and work with a realtor or mortgage advisor.
Knowing there are some extended programs from both the government and provincial sectors that can lessen the housing purchase costs can make you finally decide to get serious about finding your dream home.
You can further consult with your accountant or lawyer to make sure you can get eligibility for all if not some of the programs. In this way, you can accurately calculate your closing costs.
Land transfer tax (LTT)/ property transfer tax rebates
LTT is paid to the province by anyone who has bought or has a beneficial interest inland. Most provinces - Alberta, Ontario, Quebec, British Columbia, Manitoba, Nova Scotia, New Brunswick, and Prince Edward Island- have this extra cost. Some charges both municipal and provincial LTT- like Toronto. Check with your provincial website to make sure the rates are up-to-date.
This is one of the closing costs that range between 0.5-3.0% of the total price of the home you are buying. You can get a rebate for the full or most of the LTT amount you paid as long as you qualify.
For a property selling for $200,000 each province that has land transfer tax rebates is listed below or use this helpful tool to calculate your own LTT.
Alberta - $90
British Columbia -$2,000
Manitoba - $1,650
New Brunswick - $1,000
Newfoundland & Labrador - $898 (plus a similar amount to register a mortgage)
Northwest Territories - $300
Nova Scotia - $0 to $3,000 (depending on the municipality)
Nunavut - $300
Ontario - $1,725 (plus an additional $1,725 municipal tax if the property is located in Toronto)
Prince Edward Island - $2,000
Quebec - $1,750
Saskatchewan - $600
Yukon - $73
The Home Buyers’ Tax Credit (HBTC) or The Home Buyer’s Amount
This is a non-refundable $5,000 (about $750 with current tax rates) of a property tax that can be claimed by a qualified first time home buyer on their tax return. You have to claim this credit in the year of the purchase.
GST/HST New Housing Rebate
This is a rebate available to claim if you paid GST/HST on your purchased first home from your provincial or federal government, but this is not only exclusive to first time home buyers. This rebate also covers purchased newly built homes, constructed new houses, or even substantial renovations on your existing home.
The Home Buyers’ Plan (HBP)
This program helps first-time homebuyers increase the mortgage you can afford by increasing your down payment with money taken from your Registered Retirement Savings Plan (RRSP). You can take out up to $35,000 that needs to be repaid in the next 15 years to avoid penalties. Check with your financial advisor on this decision so you know the possible effect of qualifying for this program on your long term financial implications.
The First Time Home Buyer Incentive
This is not a rebate program but a shared-equity mortgage with the government of Canada. The government takes up a 5-10% stake in your home, with the first time home retaining exclusive access.
This allows you to buy the home with a lesser deposit, and lesser monthly mortgages payments. It requires repayment within 25 years based on the home’s market price at the time the incentive gets paid back. Whether there is a decrease or increase in the home’s value the government also gets the same benefits to share. If the property is sold before the contribution is paid, the government gets its applicable share from the sale.
The best way to find out if you qualify for any of these programs is to ask an experienced realtor or mortgage advisor. Do not be afraid to consult with them to get all the possible programs you can be eligible for lowering your home purchase. Consider all these potential programs so you can make sure you got all the help in purchasing a home for the first time. Need someone to consult or talk about these programs? Contact JoAnn Visaretis and start finding your dream home today!