By: Lisa Fayle

Government Help For First Time Buyers

Tags: Market News

There are several government-sponsored programs available for first-time home buyers, including:

First-time Home Buyers’ Tax Credit (HBTC) First-time Canadian home buyers who bought a home after January 27, 2009 are eligible for the First-Time Home Buyers’ Tax credit. This income tax credit is non-refundable, and is claimed during the tax year the home is purchased. Homes that qualify for the tax credit include existing or newly constructed single-detached houses, semi-detached houses, condominiums, multiplexes, apartment buildings and mobile homes. The homeowner must occupy the home in order to receive the tax credit. The tax credit amount is calculated by multiplying $5,000 by the lowest personal tax rate, and is claimed by homeowners within their personal income tax returns.

Home Buyers’ Plan (HBP) The Home Buyers’ Plan (HBP) is a federal government program that allows you to withdraw funds from your registered retirement savings plan (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. You can withdraw up to $25,000 in a calendar year.

Your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the HBP, or they may not be deductible for any year.

Generally, you have to repay all withdrawals to your RRSPs within a period of no more than 15 years. You will have to repay an amount to your RRSPs each year until your HBP balance is zero. If you do not repay the amount due for a year, it will have to be included in your income for that year.

GST/HST New Housing Rebate Although not restricted to first-time home buyers, the GST/HST New Housing Rebate is a tax rebate from the Canadian federal government that new home buyers can take advantage of. This rebate applies to newly built or substantially renovated homes that are owner constructed, or purchased from a builder. Owners have up to two years from the date of their home occupancy to submit a claim to receive the GST, or the federal portion of the HST, on costs such as land and construction materials. To qualify for this rebate, homes must be worth less than fair market value of $450,000. Additional tax rebates for new home construction are also available in some Canadian provinces.

Land Transfer Tax (LTT) Refund The LTT refund program is for resident of Ontario. Other provinces have similar programs. You may receive a refund from the Ontario government of up to $2,000 of the land transfer tax you paid on your first home. To qualify for this refund: • You must be at least 18 years old. • You cannot have previously owned a home, or an interest in a home, anywhere in the world. • Your spouse cannot have owned a home, or an interest in a home anywhere while they were your spouse. • You may receive the refund at the time you register your home purchase. If not, you must apply for it no later than 18 months after the registration date.