Buying a house for the first time is a big and important decision in your life. As a team who represents you and looks out for your best interest, we would like to introduce you to the First-Time Home Buyers’ Tax Credit.
First-Time Home Buyer’s Credit (FTHBC) is a government program geared towards buyers like you. The objective is to reduce costs associated with purchasing a home. As a first time buyer, you are eligible for a 15% income tax credit on a maximum of $5,000 of home purchase costs such as legal fees and land transfer taxes. It can be claimed for the taxation year that you acquired the house.
You are considered to be a first time buyer if neither you and your spouse or common-law partner has owned and lived in another home in the year of the purchase or in any of the four previous years.
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RRSP Home Buyer's Plan
The Home Buyer’s Plan (HBP) is a government program that allows home buyers to withdraw up to $25,000 from their Registered Retirement Saving’s Plan (RRSP) to put towards buying or building a new home.
Before you can withdraw funds, you have to be entered into a written agreement that specifies whether you will be buying or building your new home. You also must occupy this space no later than a year after buying or building this new home.
To take advantage of this program you have to be considered a first-time buyer. You are not a first-time home buyer if you (or you and your spouse) has owned a home which you have occupied as your principal place of residence in the past 5 years.
Once those conditions are met each person can withdraw up to $25,000 tax-free from their RRSP for a new home. Couples, including common-law, can withdraw up to $50,000. You will not pay income tax on these amounts as long as these funds will be repaid into an RRSP in the future.
Existing homeowners can also use this program to purchase an accessible home or a home for a disabled dependent relative. The intended individual must qualify for the Disability Tax Credit (DTC) and this home must be more accessible or better suited to the care of this individual.
HST New Housing Rebate
The HST New Housing Rebate program allows you to claim a rebate on part of the HST you pay on the purchase price of either a newly constructed home or cost of building the home. You can claim a rebate on a newly renovated home, a purchase of a new mobile home, or when your home is destroyed in a fire and is subsequently rebuilt.
The purchase price of resale homes are exempted from the HST whereas the purchase price of newly constructed homes are subject to HST. New home buyers can apply for a 36% rebate on the federal portion of the HST of the purchase price to a maximum of $6,300 for homes costing $350,000 or less.
For new homes priced at $350,000 to $450,000 the rebate will be reduced proportionately. Homes priced over $450,000 would not receive a rebate on the federal portion of the HST. For the provincial portion of the HST, new home buyers can apply for a 75% rebate applicable to the purchase price to a maximum of $24,000.
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