First Time Home Buyers Credits & Benefits Available

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Here is a summary of three important benefits available to first time home buyers.

1. First Time Home Buyers Tax Credit

2. First Time Home Buyer Land Transfer Tax Rebate

3. Expansion of the Home Buyers Plan (RRSP)

 

1. First Time Home Buyer Land (FTHB) Tax Credit

In 2009 the Government of Canada introduced this $5,000 non-refundable income tax credit amount on a qualifying home acquired after January 27, 2009. Its purpose is to assist first-time home buyers with the costs associated with the purchase of a home, the Government of Canada. For an eligible individual, the credit will provide up to $750 in federal tax relief.

This credit can be shared between buyers or claimed in full by one or the other.

2. First Time Home Buyer Land Transfer Tax Rebate

How much is the LTT refund?

The maximum amount of the refund is $4,000. If the refund is claimed at time of registration, it may offset the land transfer tax ordinarily payable. If not claimed at registration, the refund may be claimed directly from the Ministry of Finance. No interest is paid on this refund.

Who qualifies?

To claim a refund, you:

  • must be at least 18 years of age;
  • must occupy the home as your principal residence within 9 months of the date of transfer; and
  • cannot have ever owned a home, or an interest in a home, anywhere in the world.

In addition:

  • your spouse cannot have owned a home, or an interest in a home, anywhere in the world while being your spouse; and
  • in the case of a newly constructed home, where the agreement of purchase and sale was entered into before December 14, 2007, you must be entitled to a Tarion New Home Warranty.

How is it paid?

The purchaser’s solicitor pays the Land Transfer Tax on behalf of the purchaser on the closing date. The purchaser will be required to provide their solicitor closing fund (certified) that will cover the closing expenses.

How is the Land Transfer Tax calculated? 

The tax is calculated on the value of the consideration for the transfer. In certain circumstances the Land Transfer Act (Act) deems the value of the consideration to be the fair market value of the land.

On transfers of residential real property in Ontario, Land Transfer Tax (LTT) is calculated on the purchase price (less a HST calculation, if the property purchased is a newly built home). The LTT is payable by the purchaser on the purchase price upon registration of a Transfer/Deed of Land in the Ontario Land Registry Office on closing based on the following upward sliding scale:

  • 0.5% on the first $55,000 of the purchase price, plus;
  • 1.0% on the amount exceeding $55,000 up to and including $250,000, plus;
  • 1.5% on the amount exceeding $250,000 up to and including $400,000, plus;
  • 2.0% on the amount over $400,000
  • (Please note: non-residential properties, such as industrial or commercial real estate, there is no 2% charge since the tax rate is 1.5% for any amount of purchase price over $250,000 regardless of the total price).
  • 2.5% on the amount exceeding $2,000,000, where the land contains one or two single family residences.

NOTE: If you are buying new from the builder, the Land Transfer Tax is calculated on a price which is net of the HST and therefore the Land Transfer Tax will be slightly less for a new home than for a resale home with the same price.

3. Expansion of the Home Buyers Plan

To provide first-time homebuyers with greater access to their RRSP savings to purchase or build a home, the Government of Canada has increased the Home Buyers’ Plan withdrawal limit to $25,000 from $20,000 per person for withdrawals made after January 27, 2009.

This means a couple could take advantage of $50,000 combined!

To obtain more information on the First-Time Home Buyers’ Tax Credit and the Home Buyers’ Plan, call 1-800-O-Canada or visit the Canada Revenue Agency website at www.cra.gc.ca.