If you are a first time home buyer, congratulations on this significant step in your life! A home is generally considered the largest investment most people will make in their life.
The Canadian and Ontario government has made it easier to enable first time home buyers to afford their first home by providing programs, tax credits and rebates such as:
- RRSP Home Buyers Plan
- Ontario Land Transfer Tax Credit
- Toronto Municipal Land Transfer Tax Credit
First Time Home Buyers RRSP Plan (up to $25,000)
The First Time Home Buyers RRSP Plan (HBP) allows first time home buyers to withdraw up to $25,000 from RRSPs to buy or build a home for yourself or for a related person with a disability. The withdrawn amount must be repaid within 15 years, subject to a minimum annual repayment that is 1/15 of the amount withdrawn. If the full $25,000 is withdrawn, the minimum annual repayment is $1,667. If less than the minimum is repaid in any particular year, the balance is added to the taxpayer’s income. To qualify for the Home Buyers Plan, an individual must not have not owned a home during the last 4 full calender years.
Follow the link for more information on the RRSP Home Buyers Plan.
First Time Home Buyers Ontario Land Transfer Tax Credit (up to $2000)
The Land Transfer Tax Credit is a refund of the cost of the provinces land transfer tax up to a maximum of $2,000. This will allow first time home buyers to purchase a home up to $227,500 without having to pay any land transfer fee. Any amount higher than $227,500 is taxed a rate of approximately 1.5%. To qualify the property must be owner occupied. The first time home purchaser may claim the full maximum amount or a proportion of the maximum refund amount. To qualify for the Land Transfer Tax Credit, you cannot have ever owned a home, or an interest in a home, anywhere in the world. The refund can be given instantly at the lawyers office but advise the lawyer prior to the closing date if you qualify for the rebate
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The refund amount is reduced when one or more of the transferees are not a first time home buyer. The reduction will be proportionate to the interest in land acquired by the individuals who are not first time home purchasers. For example, a parent who is not a first time home buyer and child who is a first time home purchaser, purchase a home with equal 50/50 interests, the child may claim 50% of the land transfer tax refund. The child’s claim cannot exceed 50% of the maximum allowable refund, i.e., 50% of $2,000.
Click the link for more information on the Ontario & Toronto – Residential Land Transfer Taxes or Ontario Government Website.
Follow the link for more information on the Ontario Land Transfer Tax Rate.
First Time Home Buyers Toronto Land Transfer Tax Rebate (up to $3725)
First time home buyers of a newly constructed or re-sale residential property qualify for the Toronto Land Transfer Tax Rebate. The maximum allowable rebate is $3,725.00. This allows first time home buyers in Toronto to purchase a home valued as high at $400,000 without having to pay a Toronto land transfer tax. Any additional amount above $400,000 will be taxed at a rate of 2%. The property must be owner occupied.
If you are eligible for a rebate of all or a portion of the MLTT you owe, your lawyer will be able to claim the rebate electronically through Teraview version 6.0 software when he/she registers your transfer/deed.
More information on the Toronto Land Transfer Tax Rebate (MLTT)and the Toronto land transfer tax rate can be found at Ontario & Toronto – Residential Land Transfer Taxes or on the City of Toronto website.
Non-Conventional Mortgage Options - Less than 20% Downpayment
For most people, the hardest part of buying a home – especially a first home – is saving the necessary down payment. CMHC-insured financing can help open the doors to homeownership by enabling homebuyers to purchase a home with a minimum down payment of 5%.
- Loan-to-value ratios up to 95% for 1 – 2 unit owner-occupied properties.
- Loan-to-value ratios up to 90% for 3 – 4 unit owner-occupied properties.
- Down payment flexibility – In addition to traditional sources, non-traditional sources of down payment are permitted for loans with loan-to-value ratios from 90.01% – 95%.
- Flexible financing options – single advance and progress advances are available.
- CMHC-insured mortgages are portable – helping to reduce or eliminate the premium on the purchase of a subsequent home.
- CMHC offers mortgage loan insurance premium refunds for homeowners who purchase an energy-efficient home or purchase and make energy-saving renovations to an existing home.
Click on the link for further information about CMHC products and how they can help you purchase your new home.
Contact Me to find out more information about First Time Home Buyer programs, tax credits and rebates.