Did you know, you can get first-time buyer incentives more than once?
We will cover that in more detail shortly
First-time buyer incentives are a huge topic and its moving target
There are so many things to cover here, so I’ll do the best I can to organize them
efficiently for you
Don’t worry about writing notes, everything is details carefully in the description
and you can always call me for personalized answers to your skill-testing
questions
Let’s start with savings and down payment
The minimum down payment is 5% of the purchase price up to $500,000
10% is required for the difference above $500,000 and below $1,000,000
There have been “talks” of increasing the threshold to $1,250,000 but nothing
has been finalized at the time of this recording
You must pay a premium or fee when putting less than 20% down
This is based on the down payment percentage and size of the mortgage loan
You do not have to pay this upfront, it is added on to the mortgage and amortized
into the loan
To be clear, all of the following incentives are for principal residence use, not
rentals.
First Home Savings Account
The First Home Savings Account is a new savings vehicle that was announced in
the 2022 federal budget and became available as of April 1, 2023.
It combines “features” from both TFSAs (Tax-Free Savings Accounts) and
RRSPs (Registered Retirement Savings Plans)
Your contributions to your First Home Savings Account (FHSA) are tax-free
The kicker here is you don’t have to pay yourself back when you take out money
from your first home account to purchase your first home.
Account holders can contribute up to $8,000 annually to the account, with room
rolling forward if they don’t use it all during the calendar year, up to a lifetime
maximum of $40,000.
Partners who are saving for a first home together can each have a First Home
Savings Account , with a combined total room of $80,000.
RRSP Home Buyers’ Plan
If you haven’t purchased a home within the last four years (or lived in a spouse’s
home in the same timeframe), you may qualify for the RRSP Home Buyers’ Plan
The Home Buyers Plan isn’t a credit or rebate.
Instead, it allows first-time home buyers to use their tax-sheltered savings in a
Registered Retirement Savings Plan (RRSP) for their down payment.
As a first-time home buyer, the Home Buyers Plan lets you withdraw up to
$60,000, previously $35,000, for your down payment, which must be repaid into
your RRSP within 15 years.
There was also recently an extension the amount of time home buyers have
before they need to start making repayment instalments,
to five years from the current two, for those who make Home Buyers Plan
withdrawals between January 1, 2022, and December 31, 2025.
The money must be in your RRSP at least 90 days before the purchase of your
house.
There are some additional conditions to be aware of, and there’s a risk you may
cannibalize your long-term savings by using funds from your RRSP today –
be sure to do your research before using this program.
I am not an accountant, so please speak with your accountant and financial
advisor before touching your investments or savings
It is crucial to put any withdrawal request from your bank or financial advisor in
writing
I personally had saved money in my RRSP with a well-known investment firm for
the purpose of purchasing my first home about 20 years ago
The financial advisor apparently screwed up and didn’t withdraw the funds
correctly, stating their intended use
The entire RRSP withdrawal was added to my annual income, costing me a
substantial amount of additional income tax and lost tax benefits
**Sign
The RRSP Home Buyers’ Plan is advantageous for Canadians because,
generally speaking, early withdrawals from RRSPs are considered taxable
income.
In this case, you are exempt, but you must start repaying the amount borrowed
from the RRSP five years after you buy, in annual instalments over the 15-year
timeline.
Failure to make a Home Buyers Plan repayment will result in that portion of the
funds being earmarked as taxable income for that tax year.
First-Time Home Buyers’ Tax Credit
The First-Time Home Buyers’ Tax Credit, introduced in the 2009 federal budget,
allows first-time home buyers in Canada to recover some of the costs associated
with their purchase.
It helps offset legal fees, inspections and other similar closing costs.
The First Time Home Buyers’ Tax Credit is a non-refundable credit that allows
you to now write off up to $10,000
The maximum rebate was previously valued at $750 until the 2022 budget was
passed,
which increased the credit amount to a maximum rebate of $1,500.
Hey, it is better than nothing
GST New Housing Rebate
You may be eligible for a new housing rebate for some of the GST paid if you
purchased new housing from a builder for less than $450,000
There is obviously next to nothing in this price range in Greater Vancouver or the
GTA, so hopefully, the government smartens up and double this number
Property transfer tax savings
In British Columbia, you are exempt from paying “full” property transfer tax on
your principal residence if the purchase price is 835k or less
There is no PTT (property transfer tax) charge up to 500k and a discount is
applied between 500k and 835k)
There is a sliding scale exemption for properties between 835k and 860k.
Full PTT payment is required past this point.
If you purchased new housing from a builder for less than $1,100,000, you may
be eligible for a new housing rebate for some of the GST paid.
A partial exemption is available for properties with a fair market value between
$1,100,000 to $1,150,000
Multigenerational Home Renovation Tax Credit (MHRTC)
Although this rebate is not specific to first home buyers, considering a substantial
portion of first home buyers are now forced to reply on parents or grandparents
for help, I felt this was worth mentioning
The newest tax credit to be offered to homeowners, the Multigenerational Home
Renovation Tax Credit is designed for members of the same family to live
together in one dwelling.
This credit offers a refund for eligible expenses for renovations that create self-
contained secondary units, such as “in-law suites”.
Up to $50,000 can be claimed for each completed qualifying renovation, with a
credit of 15% of costs, up to a maximum of $7,500 for each claim.
30 Year Amortizations for First-Time Buyers of New Construction
In Budget 2024, the federal government announced it would amend mortgage
rules to allow up to 30 year mortgages for first-time homebuyers purchasing new
builds.
This takes effect August 1st, 2024
How to re-qualify as a first time buyer?
You can use the Home Buyers’ Plan more than once if you did not own your
principal residence for four years prior to making a withdrawal from your RRSP
That four-year period may be shorter if you go through a divorce
That’s all for now, call me any time with skill-testing questions
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