Over recent decades here in Canada there have often been first time home buyers grants that provide money back and incentives to encourage more people to buy their own homes provided they meet the credit and other qualifications to be approved for a Mortgage in Canada. These incentives are not always called grants – they come with many different names such as ‘plans’, ‘refunds’, or ‘credits’ but basically they all amount to the same thing: reduced costs and more ways to be able to buy a home.
If you’re a first time home buyer here in Ontario you can make use of a provincial land transfer tax refund as well as two other federal schemes. None of the incentives offered right now are grants as such, but they can get money back into your pocket that will help with the cost of buying a home.
The good thing is you’re not restricted to using just one of these first time home buyers grants, you can use any or all of them together, and we’d recommend you do. The paperwork may seem like an inconvenience but if spending the time on the paperwork saves you money, why not do it?! So what are the plans available right now – as of spring 2013?
Ontario Land Transfer Tax Refund for First Time Home Buyers
If you’ve never bought a home before you may not know that you have to pay land transfer tax. This is basically a tax that’s paid to the government each and every time a piece of land (with or without a home on it) changes hands between owners. If you’re interested in knowing how much land transfer tax you would pay, here’s how to work it out:
0.5% of the value of the purchase up to and including $55,000
1% of the value of the purchase which exceeds $55,000 up to and including $250,000, and
1.5% of the value of the purchase which exceeds $250,000, and
2% of the amount by which the purchase exceeds $400,000.
So obviously the more expensive the home the more tax you have to pay, and to calculate the tax you would pay you should add up the amounts for each price bracket that applies to you.
Anyway, as a first time home buyer you can apply for a refund on all or part of this tax up to a maximum of $2,000. So depending on the purchase price of your home this refund could cover the land transfer tax bill in its entirety. You should apply for the refund within 18 months of the date of transfer, but I’d do it as soon as possible if it was me!
First Time Home Buyers Plan
Now this next plan is a bit more like what you’d expect from a first time home buyers grant. You can borrow up to $25,000 from your RRSP to use for a down payment to buy a new home. And if you’re buying with a spouse, both of you can use this amount, so you could get up to $50,000. This is a nationwide plan that is offered in order to help buyers to purchase their first homes and the amount you borrow must be paid back within 15 years.
First Time Home Buyers Tax Credit
The final one of the three first time home buyers grants that you can use right now is the HBTC – Home Buyers Tax Credit.
This is basically a gift from the government of Canada that gives you up to $750 off your personal income tax bill. It’s not a great deal of money when you consider just how much it costs to buy a home, but it’s a help. Your tax bill will be $750 less, allowing you to put that money to better use in your new home.
So these are the first time home buyers grants that are offered as we write this, but keep your eyes peeled for any new grants or incentives as they could come along at any time.
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