And everything you need to know about it!
Written By: Graeme MacPhail, REALTOR of Royal LePage Nanaimo Realty. I’d love for the opportunity to earn your business in both buying or selling a property. Give me a call.
The Federal government has several programs available to help assist and support new buyers entering the market hoping to make their first purchase.
If you’re thinking of getting into the market, it might be worth your while to do some digging and be aware of all the credits and exemptions that are available to you, to help you save a bit of your hard-earned money!
Read on here as I go through some of the money saving programs that you as a first-time home buyer may be eligible for… because who wouldn’t want to save a bit more money if they could?
Home Buyers Tax Credit
Introduced by the Canadian Government is the first-time home buyers tax credit that allows first-time buyers the opportunity to recovery some of their costs associated with the purchase.
There are a number of closing costs during the process of buying a home (read more about on my other blog here) such as legal fees, inspections, appraisals and more. For this you can get a home buyers tax credit that is a non-refundable credit valued at $750.
The first-time home buyers’ credit is calculated by multiplying the lowest personal income tax rate for the year by $5,000.
Do I quality for the tax credit?
When you file your taxes, if you’re a first-time home buyer and purchased a home that qualifies, than you can claim $5,000 on line 369 of your return but this is only applicable if you both of the following apply:
- You are a first-time home buyer
- You or your spouse or common-law partner acquired a qualify home
A home qualifies for the tax credit if:
- It is registered in you or your spouse’s or common-law partners name in accordance with Land Title registration
- Is located in Canada
And is a property type of the following:
- Single Family Home
- Mobile Home
- Semi Detached Houses
Please note that this $5,000 claim that you will make on line 369 of your tax return has to be split with a common-law partner or spouse if you both have bought the home. You cannot each claim the $5,000 but instead would do $2,500 each or whatever split benefits you the most while filing your taxes.
Property Transfer Tax Exemption
Property Transfer Tax (PTT) is a closing cost that is based on the purchase price of the home by calculating. For a more detailed breakdown of how its calculated, read this blog. As a first-time buyer, you may qualify for a full exemption of PTT if you are purchasing a home for $500,000 or less. To qualify for a full exemption, you must:
- Be a Canadian Citizen or permanent resident.
- Have never owned an interest in a principal resident anywhere in the world at any time
- Have lived in BC for 12 consecutive months immediately before the date you register the property, or filed at least 2 income tax returns as a BC resident in the last 6 years.
If your purchase price is between $500,000 to $525,000 you may qualify for a partial exemption of the PTT and just have to pay a portion of it.
GST Rebate On New Housing
If you’re a first-time buyer and purchasing a newly built home, you are able to apply for a GST credit from the developer and/or the government. In BC you are eligible for a rebate of 36% of the GST which in BC is 5%.
If the home is under $350,000 there is a full general rebate if the buyer intends on using the home as their principle residence, and there are partial rebates for homes up to $450,000.
Home Buyers Plan (RRSP Program)
The home buyers plan (HBP) is a program that allows you to withdraw up to $25,000 from you’re RRSP tax free to fund your down payment. This $25,000 has been proposed to be upped to $35,000 in the new federal budget.
This can be used for buying or building a qualifying home for yourself or a person with a disability. There are requirements to the homing having been in your RRSP for at least 90 days before the purchase, and there will be requirements about putting that money back into the RRSP within a certain time frame.
If you’re looking to purchase a property and would love some guidance provided by David or myself, we would love the opportunity to earn your business and to sit down and discuss how we might be able to help! Feel free to give me a call or text at 250.667.3441 or email at firstname.lastname@example.org