So, you’ve decided to buy your first home! Congratulations, you’ve made a great financial decision! Investing in your first home represents one of the largest investments that you will likely make in your lifetime, and both the Ontario and federal governments want to ensure that you succeed by offering countless ways to aid and encourage the first-time homebuyer.
Canada’s Economic Action Plan introduced the First-Time Home Buyers’ (FTHB) Tax Credit and the expansion of the Home Buyers’ Plan (HBP) to provide you with additional benefits and help you realize your dream of homeownership.
The First-Time Home Buyers' (FTHB) Tax Credit provides a non-refundable $5,000 credit for homebuyers for a qualifying home—up to $750 of savings on your tax return! Restrictions do apply. To learn more about the First-Time Home Buyers’ Tax Credit, whether you qualify and how to make the claim, visit www.cra-arc.gc.ca/hbtc.
The RRSP Home Buyers' Plan (HBP) allows first-time homebuyers to withdraw up to $25,000 tax-free from their Registered Retirement Savings Plans (RRSPs) for a home purchase! With 15 years granted to repay the borrowed amount, many first-time home buyers are quick to take advantage of this opportunity and set up new or top up existing RRSP accounts well in advance of their anticipated home purchase.
The Land Transfer Tax Credit is a refund of the cost of Ontario’s land transfer tax up to a maximum of $2,000. This may allow first time homebuyer to purchase a home up to $227,500 without being required to pay a land transfer fee. The refund often can be rebated instantly at your lawyer’s office, however, be sure to advise your lawyer well in advance of the closing date if you qualify for the rebate.
If you plan to call Toronto home, first-time homebuyers of a newly constructed or resale residential property may also qualify for the Toronto Land Transfer Tax Rebate. The maximum allowable rebate is $3,725, allowing first timers to purchase a home valued as high as $400,000 without being required to pay the Toronto land transfer tax!
Buying your first home is a both an emotional and financial commitment and at first can be overwhelming, but not if you do your homework! There are countless websites available to help you, as a first-time home buyer, to understand the incentives available to you. A Mortgage Broker is another invaluable resource and should not be overlooked!
Remember, Canada wants you to own your own home and for that reason has created some fabulous incentives to ensure that you succeed in your first go-around!
The information above is intended as a reference tool only. Before making any financial decisions, be certain to meet with your financial adviser and your mortgage broker to discuss your personal situation and goals.
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