Tis the Season for Giving!
In the spirit of the holidays, I want to chat about 4 ways first time home buyers can get an advantage when making their first home purchase. This short video isn’t enough time to get into a lot of detail, so google “Ontario first time home buyer incentives” to read more.
The first one, is the Home Buyers Plan- This program allows for a tax free withdrawal from your RRSP of up to $35,000 ($70,000 for a couple) to buy or build a home. You get 15 years to repay this interest free. I used this one for my first home. I didn’t have a lot in my RRSP, but I took out everything to help with the downpayment.
This has been expanded to now include people who have not occupied a home that they or their spouse have owned. Meaning there is potential to use this plan a second time, if the first withdrawal is repaid. The example might be for separating or divorcing couples who need to buy out the share of a home, or get a new home when they move out.
Number 2 is relatively new- the Tax Free Home Savings Account. This is only available to first time home buyers, and allows for TAX DEDUCTIBLE contributions of $8000/year to be made. This is the best part of an RRSP combined with the tax benefit of the TFSA! Up to $40,000 can be deposited into this account and left to grow.
The third option is the Land Transfer Tax Refund. Also for first time home buyers. Land Transfer Taxes are paid on every sale of property in Ontario. First time buyers can qualify for up to $4000 in savings if eligible.
For any GTA viewers, you know Toronto applies an additional transfer tax on your sales- but they also offer a rebate of up to $4,475.
The last one for today is the CMHC first time home buyer incentive. This incentive is up to 5% of the property’s value to be given as an interest free loan that gets repaid when the home is sold or within 25 years. Not bad!
Buying a home is expensive enough- take advantage of these programs. They can make a huge difference when you are ready to enter the market.
When we work with buyers, we make sure they understand how to access and use these incentives.