Programs for Virgins

AKA First Time buyers

Canada has a very large housing market and in some regions originally attempting to buy a home can be quite challenging. Purchasing for the first time can be expensive and stressful. We are extremely fortunate to have a government in Canada that is constantly working on programs that try and provide some financial relief to first-timers.

I have compiled the following information as a guide to help provide you with education regarding your first purchase. During our calls, we will discuss these programs and determine if they can be used for your purchase.

1st Let's Talk Down Payment & Default Insurance

Before reading about these programs it is strongly recommended that you understand how much your minimum down payment needs to be as this affects both the size of your mortgage as well as the rates that are available to you. When purchasing with a down payment lower than 20% you are required to insure the loan with mortgage default insurance. This will add between 2.8% & 4% of the mortgage amount to the mortgage depending on the size of the down payment.

For more on Mortgage Default Insurance click here.

RRSP Home Buyers Plan

If you haven't owned a home or live in a home owned by a spouse in the last four years you may qualify for the RRSP Home Buyers Plan. This plan allows you to borrow up to $35,000 tax-free from your RRSP's to contribute to your down payment. The RRSPs are required to be in your account for 90 days and are to be paid back over 15 years.

In order to complete your RRSP withdrawal, you must complete form T1036 'Home Buyers Plan Request to Withdraw Funds From an RRSP' You are required to complete 'Area 1' and then submit this form to your RRSP issuer to complete 'Area 2'.

For more information click here.

Ontario:

Toronto:

Land Transfer Tax Rebate

You can receive a land transfer tax rebate in Ontario up to $4,000. The tax is marginal and charged based on how much of your home's value falls into each taxable category.

To qualify for a refund:

The purchaser must be at least 18 years old.
The purchaser must occupy the home as their principal residence within nine months of the date of transfer.
The purchaser cannot have ever owned an eligible home or an interest in an eligible home, anywhere in the world at any time.
If the purchaser entered into an agreement of purchase and sale before December 14, 2007, the home must be a newly constructed home and the purchaser must be eligible for the Tarion New Home Warranty.
If the purchaser has a spouse, the spouse cannot have owned an eligible home or had any ownership interest in an eligible home anywhere in the world while he or she was the purchaser's spouse. If this is the case there is no refund available to either spouse.
This program is only open to Canadian citizens and permanent residents of Canada.

For more information on the Ontario, Land Transfer Tax Rebate click here.

Residence of the city of Toronto are charged an additional municipal land transfer tax and are also entitled to a municipal land transfer tax rebate.

For more information on the City of Toronto, Land Transfer Tax Rebate click here.

First Time Home Buyers Tax Credit

Back in 2009, the federal government introduced the first time home buyers tax credit. This tax credit allows first-timers the opportunity to recover some of the costs associated with buying their home. It gives back some of the money used for legal fees, inspections as well as other closing costs. This is a non-refundable credit valued at $750 and it must be claimed on a qualifying house within one year of purchase. In order to claim your first time home buyers tax credit, you must claim it on line 369 of your personal tax return.

Qualifying homes must meet the following criteria:

Located in Canada
New or existing home
Be a Single, semi, townhome, mobile home condo or apartment
You must intend to occupy the home within one year of purchase
Can include a share in a coop housing corporation that gives you possession of the home

Qualifying applicants must meet the following criteria:

You or your spouse must purchase a qualifying home (listed above)
The qualifying home must be registered to you or your spouse
You can not have owned a house in the last four years
you cannot have resided in a home owned by your spouse in the last four years

For more information on the first time home buyers tax credit click here!

GST/HST New Housing Rebate:

If you have a new build home complete a major renovation on an existing home or rebuild a home that was destroyed by fire the purchaser will be charged HST on these transactions. You may be entitled to a rebate of this tax if you qualify.

Requirements:

Purchased new housing or constructed or substantially renovated housing, which could include housing on leased land (if the lease is for at least 20 years or gives you the option to buy the land), for use as your (or your relation’s) primary place of residence
purchased shares in a co-operative housing (co-op) complex for the purpose of using a unit in the co-op for use as your (or your relation’s) primary place of residence
constructed or substantially renovated your own home, or hired someone else to construct or substantially renovate your home for use as your (or your relation’s) primary place of residence and the fair market value of the house when the construction is substantially completed is less than $450,000

For more information on the GST HST New Housing Rebate click here.

First Time Home Buyer Incentive

The government recently created the incentive program to assist potential first time homeowners by contributing a portion of the down payment. This allows for the total mortgage amount to be smaller and therefore making payments smaller and more manageable. They will contribute 5% on existing homes and up to 10% on new build homes.

Essentially the government is investing in your home, and the amount required for you to repay will be the percentage lent to you and not the dollar amount. This means the government will benefit from an increase in value or suffer from a decrease. You are required to repay this loan back in 25 years or when the home is sold. You can pay this back at any time without a prepayment penalty. The repayment amount is based on the homes fair market value at the time of repayment.

For more information in the first time home buyer incentive click here.

Becoming a first time home buyer can be an overwhelming experience. I am here to assist you through this process.

Please book a time to speak with me directly into my calendar