Government rebates and incentives for first-time buyers

Government rebates and incentives for first-time buyers

Let’s face it, when you buy a condo, you’re shelling out a lot of money. Luckily, there are a number of government incentives and exemptions that can help reduce the loan for first-time buyers.

  1. First-Time Home Buyers’ Incentive
    This helps first-timers get into the market by providing 5-10% of the purchase price to be used towards your down payment. This reduces the mortgage amount you’ll need, making it a bit more affordable. You will eventually have to pay it back - either when you sell the home or after 25 years, whichever comes first.

    The big caveat is that it only applies to properties up to $500,000, which may not help Toronto buyers that much. But hey, if you so qualify, every little bit helps. And rumour has it that the max will be raised this year to help first-time buyers in the GTA - we’ll keep you posted. Dive into the details.

  2. RRSP Home Buyers’ Plan (HBP)
    The HBP allows first-time buyers to borrow from their Registered Retirement Savings Plan (RRSP) to use as a down payment - you’re basically borrowing money from yourself, tax-free. If you’re eligible, you can access up to $35,000 per person - a couple can access $70,000 if they’re buying together.

    The nice thing is, you can qualify for this plan even if you’re not actually buying for the first time. Basically, as long as you and your partner haven’t owned a home for the last four years and have repaid the amount you borrowed, you can borrow from your RRSP to do it again.

    You have 15 years to pay it back - each year, you’re required to repay 1/15th of the outstanding balance, but you’re free to repay larger chunks if you have them. If you don’t repay the plan in a given year, the amount you don’t pay is added to your total income for the year and you’re taxed on it. Learn more about the HBP

  3. First-Time Home Buyers’ Tax Credit
    This is a tax credit that’s calculated by multiplying the lowest personal income tax rate for the year by $5,000 for a max refund of $750. You can claim it on your tax return for the year in which you made the purchase. Eligibility is the same as for the RRSP plan - if you or your partner haven’t owned a home in the last four years. Learn more

  4. Land transfer tax refunds
    When you buy a condo, you pay a provincial land transfer tax upon closing that’s based on the purchase price. And lucky you, since you’re buying in Toronto, you get a double tax whammy: the City of Toronto also charges a municipal land transfer tax. But good news: as a first-time buyer, you may be eligible for an Ontario Land Transfer Tax rebate of up to $4,000. For the Toronto tax, it's a max of $4,475. Talk to your agent and lawyer for more details.

So hopefully this info helps you breathe a little easier: as a first-time buyer, you could be eligible for a lot of savings! For a more detailed list (and info on rebates for specific types of properties and locations), go here.

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