Home Ownership Incentives
RRSP Home Buyers’ Plan (HBP)
The government of Canada’s Home Buyers’ Plan allows qualified buyers to withdraw a maximum of $25,000 tax free from their RRSP’s to purchase or build a house. If your spouse is also eligible, you can each withdraw up to $25,000 towards the downpayment, for a total of $50,000. No income tax is deducted from these funds, as long as they are repaid to the RRSP according to the government’s repayment schedule.
How the Plan Works: You may participate in the plan if you (or your spouse) have not owned a home which you occupied as your principal residence in the last five years.
Repayment Schedule - The money you withdraw from your RRSP must be repaid over a period of no more than 15 years to retain its tax deferred status. Your repayment period starts the second year following the year you made your withdrawls. If you pay less then your scheduled annual payments, the amount that you don’t repay must be reported as income on your tax return for that year.
For example, in October 2015 you withdraw $24,000 from your RRSP to finance the purchase of your home. Your first annual repayment of $1,600 ($24,000 divided by 15 years) is due by December 31, 2017.
Land Transfer Tax (LTT) Rebate
First-time buyers of newly constructed homes and resale homes may receive a refund of land transfer tax up to a maximum of $2,000.
Only individuals who are at least 18 years of age, have not owned an interest in a home anywhere in the world and whose spouse has not owned an interest in a home anywhere in the world while he or she was a spouse of the individual quality as first time buyers.
The purchaser must occupy the home as his or her principal residence no later than nine months after the date the property is transferred to his or her possession.
Home Buyer Tax Credit
The Government of Canada offers a non-refundable tax credit to help first-time buyers with some of their closing costs. This Home Buyer Tax Credit (HBTC) will provide up to $750 in tax relief on the purchase of a first home. The HBTC is calculated by multiplying the lowest personal income tax rate for the year (15 per cent in 2009 and subsequent years) by $5,000. For 2009 and subsequent years, the credit will be $750.
To qualify for the HBTC, an individual must purchase a qualifying home and neither the homebuyer or the homebuyer’s spouse or common-law partner can have owned and lived in another home in the year of purchase or any of the four preceding years.