Written by Rachel Hopper & Quinn Goodwin
Buying your first property can be daunting in lieu of Ontario’s landscape of rising real estate prices. However, becoming a home owner may not be as difficult as you think. There are several programs first-time buyers in Ontario can use if they’re in need of financial assistance. These programs may act as game changers for those struggling to enter the market and help reduce the overall cost of being a homeowner
Our team has compiled a list of these programs, and how they can help you achieve your real estate dreams in no time!
Land Transfer Refund
What is a land transfer tax?
Land transfer tax is a provincial tax on real estate purchases paid by the buyers. The Ontario first-time homebuyer rebate covers the full cost of land transfer tax, up to a maximum of $4000, subject to eligibility.
Who is eligible?
Must be 18 years of age
Cannot have owned a home or an interest in a home anywhere in the world
Spouse cannot have owned a home or interest in a home, anywhere in the world while he or she was your spouse (you may still be eligible for a partial refund)
Must be a Canadian citizen or permanent resident of Canada
What is a land transfer tax refund?
No land transfer tax is payable by qualifying first-time buyers on the first $368,000 of the value of the home. First time buyers purchasing homes valued more than $368,000 would receive a maximum refund of $4000
The refund applies to all homes, whether newly constructed or resale
Must apply for the refund within 18 months after the date of registration
Ontario’s First Time Homebuyer Program
What is the program?
With this incentive, Government of Canada provides a percentage of the home’s purchase price to put toward a down payment
5% or 10% for a first-time buyer’s purchase of a newly constructed home
5% for a first-time buyer’s purchase of a resale (existing) home
5% for a first-time buyer’s purchase of a new or resale mobile/manufactured home
Who is eligible?
Qualified annual incomes of $120,000 or less
Your total borrowing is no more than 4 times your qualifying income
You or your partner are a first-time homebuyer
You are a Canadian citizen, permanent resident or non-permanent resident authorized to work in Canada
You meet the minimum down payment requirements with traditional funds (savings, withdrawal/collapse of a Registered Retirement Savings Plan (RRSP), or a non-repayable financial gift from a relative/immediate family member)
Home Buyer’s Plan
What is a Home Buyer’s Plan?
The Home Buyers' Plan is a program that allows you to withdraw funds from your Registered Retirement Savings Plans (RRSPs) to buy or build a qualifying home for yourself.
You can withdraw up to $35,000, tax free, from your RRSP accounts to put towards your down payment. Some RRSPs, such as locked-in or group RRSPs, do not allow you to withdraw funds from them.
Who is eligible to participate in the Home Buyer’s Plan?
You must be considered a first time home buyer
You must have a written agreement to buy or build a qualifying home
You must be a resident of Canada when you withdraw funds from your RRSPs and up to the time a qualifying home is bought or built
You must intend to occupy the qualifying home as your principal place of residence within one year after buying or building it
*New* Tax-free First Home Savings Account
What is the program?
A tax-free First Home Savings Account that will allow Canadians under 40 to save up to $40,000 towards their first home, and to withdraw it tax-free to put towards their first home purchase, with no requirement to repay it.
Combining the features of both an RRSP and a TFSA, this plan would allow young Canadians to set aside 100% of every dollar they earn up to $40,000 and shorten the time it takes to afford a down payment.
More information to come, as the new initiative is in the planning stages…