We know that buying your first home can cause huge damage to your wallet. The good news is that the Canadian government offers several programs to help alleviate some stress for first-time home buyers. In this blog, we’d like to share 5 grants from various levels of government that you might want to take advantage of to make purchasing your first home more affordable.
1. First-Time Home Buyer’s Tax Credit (HBTC)
The First-Time Home Buyer’s Tax Credit (HBTC) allows eligible first-time homeowners to recover closing costs accompanied with their home purchase, such as legal fees, home inspections, and land transfer fees. At current taxation rates, first-time buyers can claim a non-refundable credit of up to $750.
To be eligible for the HBTC, your property must be a new or existing home in Canada. All types of homes are acceptable including detached, semi-detached, mobile homes, condos, etc. You must intend to reside in your newly purchased home within one year after the purchase. Additionally, you must not have owned or lived in a home owned by your spouse within the previous four years of the purchase. Lastly, you must have documentation of proof for your purchase.
Note: If you have a disability (i.e., you are eligible for the disability tax credit) or if you purchased the house to improve accessibility for someone who has a disability, you do NOT have to be a first-time home buyer to be eligible for the grant.
2. RRSP Home Buyer’s Plan (HBP)
If you are a first-time home buyer, the government allows you to withdraw up to $25,000 from your RRSP to help pay for your home. To be eligible, you must not have purchased a home within the past four years or lived in a home owned by your spouse during this timeframe. You may also use the funds to buy or build a home for yourself or someone you know with a disability.
It is important to note that any fund borrowed from your RRSP for your down payment must be repaid. These repayments must start two years after your purchase and the program gives you up to 15 years to make your repayments. Any amount that is not repaid after 15 years gets treated as income and you will have to pay tax on the money you withdrew.
3. GST/HST New Housing Rebate
If you’re a Canadian citizen who has paid GST or HST to either (1) buy a new home, (2) renovate an existing home, or (3) rebuild your home that was lost to fire, you may qualify for this rebate. The GST/HST New Housing Rebate gives back up to $1,500 of the GST or the federal part of the HST you paid for any of the above three scenarios. To meet the requirements for the rebate, the home must be your primary residence. The rebate is also available to Canadians who have purchased a mobile, floating, or modular home.
In addition, the province of Ontario offers rebates on the provincial portion of the HST paid by homeowners who have either renovated a home or purchased a new home.
4. Land Transfer Tax Rebate
If you have never owned a home anywhere before and reside in Ontario, British Columbia, or Prince Edward Island, you may qualify to receive a refund on all or part of your land transfer tax. The amount of refund varies depending on which province you reside. In Ontario, eligible first-time home buyers may qualify to receive the first $368,000 of the value of the home. If your home is greater than $368,000 in value, you may receive a maximum refund of $4,000.
To qualify for the refund, you must be at least 18 years of age, you cannot have owned a home in the past, and your spouse cannot have owned a home while he/she was your spouse.
5. Municipal Land Transfer Tax Rebate Program
Working in conjunction with the provincial tax credit mentioned above, the Toronto Municipal Land Transfer Tax Rebate Program can refund you up to $4,475 from the land transfer tax you pay when you purchase your new home.
To be eligible for the rebate, you and/nor your spouse cannot have owned a home at any time or anywhere in the world prior to your first home purchase. Both new and existing homes qualify.
Note: In order to receive the entire rebate, your application has to be received by the City of Toronto before the 10-day deadline is up so don’t delay sending your application in!
For more grants and programs to help you save for your first home, check out this helpful article by ShowMeTheGreen.ca.
APM Website Manager