First Time Home Buyer Incentives



Be sure to look into, and make use of, all the available first time home buyer incentives if you’re considering buying your first home. The Government of Canada, and some provincial governments, offer several different incentives that are there to help first time home buyers purchase and move into their first homes and they can save you thousands of dollars. Many first time home buyers don’t even know about these incentives, so that’s why we’d like to help. As it stands right now – spring 2013 – there are two national first time home buyer incentives, plus one more for buyers purchasing a home in Ontario; so if you’re buying real estate in Oakville you can make use of this one too.

RRSP Home Buyers Plan

The RRSP Home Buyers Plan (HBP) is an incentive offered throughout Canada. This scheme doesn’t give you money back as such but it allows you to have access to your RRSP (Registered Retirement Savings Plan) a lot earlier than you normally would. You are allowed to withdraw up to $25,000 from your RRSP in a calendar year and then use this money to go towards a down payment for a home – whether it’s to buy an existing home, or build one yourself.

If you’re buying a home with a spouse or friend, each person buying the home is able to tap into their RRSP to a personal maximum of $25,000 so you can put your funds together and have $50,000 or potentially even more to put down on a house.

The Home Buyers Plan is kind of like an interest-free loan which you have to pay back in no more than 15 years, paying back a certain amount each year until the balance is zero. If you don’t pay any back into the RRSP one year it will have to be included in your income for that year. This means that, provided you do keep to the terms, the money you take out is interest free.

First Time Home Buyers Tax Credit

Another of the nationwide first time home buyers incentives is the First-Time Home Buyers’ Tax Credit. The HBTC is a non-refundable tax credit that takes a certain amount off your personal tax bill in the year that you buy your first home. So you don’t actually get this money back in your pocket, but the credit comes off your tax bill meaning you pay less tax that year.

They calculate the HBTC based on the lowest personal income tax rate for the year (currently 15%) and multiplying it by $5,000. This means that right now you can get a tax credit of up to $750.

To qualify for this first time home buyer incentive you must buy a qualifying home (basically this includes just about all homes bought within the borders of Canada, as well as a share in a co-operative housing corporation). You must intend to occupy that home within one year of buying it, and you cannot have lived in a home owned by you or your spouse in the year of acquisition or any of the previous four years.

Land Transfer Tax Refund – Ontario

The final of the first time home buyer incentives we’re going to tell you about only applies for buying homes in Ontario, so anyone buying a home in Oakville may qualify for this. It is an incentive offered by the Government of Ontario called the Land Transfer Tax Refund for First time Home Buyers.

When everybody buys a home they have to pay a land transfer tax. This is a tax that goes to the government, like a sales tax, but on the purchase of a home rather than goods and services. The incentive provides a refund of the LTT to first time home buyers, up to a maximum of $2,000.

The conditions for qualifying are more strict than the first time home buyer incentives mentioned above. For this you can never have owned a home before, or an interest in a home, anywhere in the world – so it truly is for first time home buyers! See the Government of Ontario Ministry of Finance website for more information on this first time home buyer incentive.

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