First time home buyer perks in Ontario:

According to the latest Firm Residential Mortgage Survey, conducted quarterly by the Altus Group, first time home buyers have accounted for more than a quarter million residential home sales in Canada over the past year. Low interest rates, ever changing mortgage rules and rising home prices have played a significant factor in motivating renters to become home buyers. The Government of Canada has also played a significant role in providing motivated first time home buyers with incentives: The Home Buyer’s Plan, the First-time Home Buyer’s Tax Credit and Land Transfer Tax Rebates.

The Home Buyers’ Plan:

Since 1992, approximately 2 million Canadians have used this program to purchase roughly 900,000 homes, making this program a huge success! This program allows a first time home buyer to take out up to $25,000 from his or her registered retirement savings plan for the purchase of an existing or new property. Amounts withdrawn under the Home Buyer’s Plan must be repaid over 5-years, starting the second year following the year of the withdrawal. Here are some of the conditions for this program:

• You must enter into a written agreement (Offer of purchase) to buy or build a qualifying home. The agreement may be with a builder or contractor, or with a Realtor or private seller. Obtaining a pre-approved mortgage does not satisfy this condition.
• You intend to occupy the qualifying home as your principal place of residence.
• Your repayable HBP balance on January 1 of the year of the withdrawal is zero.
• Neither you nor your spouse or common-law partner owns the qualifying home more than 30 days before the withdrawal.
• You are a resident of Canada.
• You buy or build the qualifying home before October 1 of the year after the year of the withdrawal.

First-Time Home Buyers’ Tax Credit:

The First-Time Home Buyers’ Tax Credit (FTHB) is another incentive recently introduced by the government to help first time home buyers afford a home purchase. The FTHB Tax Credit is a non-refundable credit, based on a $5,000 amount. The credit is calculated based on the lowest personal income tax rate for the year. For 2010, the lowest rate if 15%, therefore the credit will be $750.

To qualify for the FTHB Tax Credit, you or your spouse/common-law partner must acquire a home that you intend to live in. Purchases made for investment purposes do not count towards the FTHB tax credit. If you buy a house with another individual, you can both claim the credit as long as the combined claims do not go over $750 for 2010.

In addition, you may also qualify if you are an individual with a disability (or a relative of an individual with a disability). In this case, you do not necessarily have to be a first-time home buyer, but the home must be purchased with the intent that it is a more accessible environment for the individual with the disability.

Claiming the FTHB tax credit is simple, you just note it on line 369 of your personal income tax return the tax year that the home is acquired. You don’t have to submit any supporting documents to the Canada Revenue Agency, however, you should have them accessible in the event that they are requested.

Land Transfer Tax Rebates:

Generally, anyone purchasing land in Ontario, must pay provincial land transfer tax which is calculated based on the purchase price of the property. Municipal land transfer tax applies if the land/property is located in the city of Toronto. This means, those that purchase a home in Toronto must pay both the provincial and municipal land transfer taxes.

• First time home buyers are eligible for a rebate of up to $2,000 on their Ontario Land Transfer Tax portion.
• For agreements of purchase & sale entered into after December 13, 2007, the refund applies to all homes, whether newly constructed or resale.
• To be considered an eligible first time home buyer property must be owner occupied and you as well as your spouse cannot have owned a home, or an interest in a home, anywhere in the world while being married.
• First time purchasers of a newly constructed or re-sale residential properties are eligible for a rebate of up to $3,725.00 on their Toronto Land Transfer Tax portion.

 

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