As a first time home buyer, you have no doubt begun the process of some self directed research via various popular websites. This of course is great! If you haven’t don’t fret it, the amount of information that’s available online in the digital age can be dizzying.
One great resource that I will always share that is a one stop shop with everything one needs to know is www.HomeOwnership.ca. This is a resource that is produced by Genworth Canada, which is one of the 3 mortgage insurers available in the mortgage industry.
There are key points that every first time buyer should know about current options and programs that they will benefit from. .
This is a tax credit available to first time buyers on your next Tax Return, typically results in approximately $750 credit. There are some guidelines to meet eligibility, which I would refer you to here.
Currently, if you are eligible - (click here to review eligibility) to use the Home Buyers Plan, or HBP you are able to withdraw $35,000 from your RRSP to put towards your down payment tax free. This applies to all applicants, so if you and your husband or wife are both eligible to use the HBP, you can both withdraw up to $35,000 from your RRSP. The obligation you are taking when using this method of funding your down payment is that this needs to be repaid within 15 years, the first payment being due after 2 years.
You may have heard this term before - “Land Transfer Tax” or LTT. You would likely have never encountered or been exposed to this tax previous to being a new home buyer. The long and short of this is that the Province in Ontario does assess this tax at a fixed rate against the gained interest in property. This fixed rate does scale with the purchase price of a property.
First-time homebuyers in Ontario can qualify for a rebate equal to the full amount of their land transfer tax, up to a maximum of $4,000. This would typically cover the full tax amount assessed on a purchase up to $368,333. There is an additional municipal Land Transfer Tax assessed in Toronto, which as a first time buyer you are eligible to rebate as well.
For simplicity, below is the criteria in which you are eligible for the LTT Rebate;
-You must be a Canadian citizen or permanent resident of Canada,
-You must be 18 years of age or older,
-You must live in the home within 9 months of purchasing it,
-You cannot have owned a home before, and
-If you have a spouse, they cannot have owned a home during the time they have been your spouse.
If you are buying your home with your spouse, but only one of you qualifies for this rebate, you can still receive 50% of the rebate.
If you qualify, your real estate lawyer will typically help you file the necessary paperwork. You can either file for your land transfer tax rebate electronically, or download the Ontario Land Transfer Tax Refund Affidavit for First-Time Purchasers of Eligible Homes here. For more information, visit the Ministry of Finance here.
There are of course even more Municipal and occasionally Provincial grants and first time buyer programs that are sometimes available to assist in helping first time buyers realize their dream of ownership.