Thursday, June 11, 2015

Ontario First Time Home Buyers' Programs: A Primer


Those purchasing real estate for the first time will quickly realize that the costs can add up quite fast !

Luckily, there are some government programs in place to assist first-time home buyers. 

Here is our primer on these programs.

1. First-time Home Buyers' Tax Credit (HBTC)

The HBTC provides a new, non refundable tax credit mechanism  for certain home buyers  who purchased a home after January 27, 2009. 

The general requirement is that you may qualify for HBTC if: 

• you or your spouse / common law partner acquire a qualifying home; and 
• you did not live in another home owned by you or your spouse / common law partner in the year of acquisition or in any of the four preceding years. 

Further details and requirements of the HBTC can be found here.

2. Home Buyers' Plan (HBP)

Under this federal government initiative, you may borrow up to $ 25,000.00 tax free from your RRSP to fund your purchase. 

It is important to note that you must intend to occupy the property as your principal place of residence within one year of buying or building the home. 
If both you and your spouse qualifies, you may each borrow $ 25,000 from your RRSPs for a total of $ 50,000. 

The Home Buyers' Plan requires that you are either a first time buyer or if, in a four year period, you did not live in a home owned either by you or your spouse. 

The HBP requires that you repay the money borrowed from the RRSP within 15 years. 

Full details of the HBP can be found here. 

3. Ontario Land Transfer Tax Rebate

To help ease the burden of land transfer tax on first-time home buyers, the government of Ontario offers a refund of up to $ 2,000.00. 

In order to qualify, you: 
• must be at least 18 years old;
• must occupy the home as your principal residence within nine months of the date of transfer;
• cannot have ever owned an eligible home, or an interest in an eligible home, anywhere in the world 

Further requirements and particulars can be found here

4. Toronto Municipal Land Transfer Tax Rebate

Purchase of a property in the City of Toronto attracts a separate land transfer tax, effectively creating a double tax for those wishing to live in the city. However, the municipal government also offers a rebate mechanism of up to $ 3,725.00 for the tax for a first-time purchaser of a newly constructed or re-sale residential property. 

The definition of a first-time purchaser is: 
• The purchaser is at least 18 years of age; 
• The pruchaser must occupy the home as his / her principal residence within nine months after closing; 
• the purchaser cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time; 
• if the purchaser has a spouse, the spouse cannot have owned a home, nor had any ownership interest in a home, anywhere in the world while he / she was the purchaser's spouse. If this is not the case, no rebate is available to either spouse.

Further information and requirements can be found here

At Wise Law, our Toronto real estate lawyers are available to assist you with further information about these programs and incentives.  Visit our website for more information. 

Please note that when completing a real estate closing, we may be able to claim your land transfer rebate directly through the Teraview software at the time of closing.

-Varun Robby Sharma, Associate Lawyer

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