If you’re a first time homebuyer you should be aware of the following government programs designed to help you save money on the purchase of your first home with rebates and tax incentives.
Home Buyer’s Plan (HBP)
This federal government program allows eligible first-time home buyers to withdraw up to $25,000 tax-free from their RRSPs to finance the purchasing or construction of a qualified home. This program is aimed at first-time home buyers, but you can also qualify if it has been at least 4 years since you last owned a home. To participate in this program, pick up “Form T1036” from your bank or income tax office, and submit it to the institution responsible for your RRSPs. You’ll need to repay about 1/15 of the withdrawal amount each year, and the first repayment will be due the second year after the withdrawal.
Land Transfer Tax Refunds for First Time Home Buyers
When you buy any kind of land in Ontario, you’re required to pay Ontario’s land transfer tax, which is based on the total amount paid to buy the land. The Ontario government offers first-time home buyers a refund on this land transfer tax, up to a maximum of $2000. To be eligible for the refund, you must be at least 18 years of age, and neither you nor your spouse can have previously owned a home anywhere in world. The refund can be claimed at the time of registration or claimed directly from the Ministry of Finance.
First Time Home Buyer Tax Credit (HBTC)
This tax credit is intended to support first-time buyers with the many additional costs associated with purchasing a home, including legal fees, HST on newly constructed homes, disbursements and land transfer taxes. The HBTC is a 15% credit on a maximum of $5,000 in home purchase costs, providing up to $750 in federal tax relief. When you purchase a new home, be sure to claim this credit on your income tax returns that year.
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