First Time Home Buyer Rebate and Purchase Incentive Programs available in Ontario
This is a great time to purchase real estate in Ontario,
due to low interest rates and the fact that home prices
are positioned to increase in the future. Also, there are some
excellent programs available for first time buyers to give you a financial
boost. Take a look at these programs below that are offering rebates
to home buyers with some targeted specifically to first time buyers.
First Time Home Buyer Programs available
Time Home Buyer Land Transfer Tax Rebate
- First Time
Home Buyers Tax Credit
- 5% Down Payment
- RRSP Home
Purchase Plus Improvements Program
Renovation Tax Credit
You may be eligible for a refund of up to
$2,000 on the land transfer tax payable on your purchase.
- The maximum amount of the refund is $2,000.
If the refund is claimed at closing, it may offset the land transfer
tax ordinarily payable. If not claimed at closing (registration), the refund
may be claimed directly from the Ministry of Revenue.
- To claim a refund, you must:
- be at least 18 years of age
- occupy the home as your principal
residence within 9 months of the date of transfer
- not have ever owned a home, or an
interest in a home, anywhere in the world
- your spouse cannot have owned a home,
or an interest in a home, anywhere in the world while being your spouse
- Qualifying taxpayers may claim a refund
at the time of registration electronically or on paper.
- Applications for a refund must be made
within 18 months after the date of the transfer
Get more information here: http://www.rev.gov.on.ca/english/refund/new
2. First Time
Home buyers Tax Credit
First-time home buyers may be eligible for a 15 per-cent income tax credit
to help cover closing costs.
- The First-Time Home Buyers’ Credit
(FTHBC) provides a 15 percent credit on a maximum of $5,000 of home purchase
closing costs (e.g. legal fees, land transfer taxes, etc.), resulting
in maximum tax relief of $750.
- Applicable to first-time buyers purchasing
a home closing after January 27, 2009. The FTHBC is claimable for the taxation
year in which the home is acquired.
- An individual will be considered a first-time
home buyer if neither the individual nor the individual’s spouse
or common-law partner owned and lived in another home in the calendar year
of the home purchase or in any of the four preceding calendar years.
With as little as five per cent down payment,
from personal or other sources (see below for eligible other sources), all
qualifying home buyers can purchase with as little as 5% down payment.
- Mortgage insurance for 95 per cent mortgages
is available to both first time and repeat home buyers. Home buyers have
the option of using personal sources, such as savings or gifts, or other
sources, such as lender incentives, borrowed funds/credit, or sweat equity
(the amount of money spent to help construct the home) for the required
five per cent down payment.
- Buyers using the Program may apply
up to 32 per cent of their gross monthly household income for payments
on loans for 95 per cent of the lending value of the house where the five
percent down payment comes from other sources will be 2.9 per cent of the
mortgage loan. This premium can be added to the mortgage.
- Insurance premiums on loans for 95 per
cent of the lending value of the house where the five percent down payment
comes from personal sources will be 2.75 per cent of the mortgage loan.
Insurance premiums on loans for 95 per cent of the lending value of the
house where the five percent down payment comes from other sources will
be 2.9 per cent of the mortgage loan. This premium can be added to the
- Borrowers are required to demonstrate,
at the time of application, their ability to cover closing costs equal
to at least 1.5% of the purchase price.
- Where the minimum equity requirement is
being met by way of a financial gift, the funds must be in possession of
the borrower 15 days before making an offer to purchase.
Ask your Mortgage Broker for details or visit
CMHC at www.cmhc.ca
The Home Buyers’ Plan [HBP] is a program
under which you can with-draw up to $25,000 from your registered retirement
savings plan [RRSP's] to buy or build a qualifying home. Withdrawals that
meet all applicable HBP conditions do not have to be included in your income,
and your RRSP issuer will not withhold tax on these amounts. However, before
you can withdraw funds you must have entered into a written agreement to
buy or build a qualifying home which you must occupy no later than one year
after buying or building the home.
Conditions for participating in HBP:
- You have entered into a written agreement to buy or build a qualifying
- You intend to occupy the home as your principal residence
- You have to be considered a first time homebuyer.
- Your HBP balance on January 1 of the year of the withdrawl has to be zero.
- Neither you nor your spouse can own the home more than 30 days before
the withdrawal is made.
- You must be a resident of Canada
- You must complete form T1036
- You have to receive all withdrawals in the same year
- You cannot withdraw more than $20,000
- You have to buy or build the home before October 1 of the year after the
year of the withdrawal.
If you buy the qualifying home together
with your spouse or other individuals, each of you can withdraw up to $25,000.
You cannot withdraw an amount from your RRSP under the HBP if you or your
spouse owned the home more than 30 days before the date of your withdrawal.
- Up o $25,000 per person could be withdrawn
tax-free from RRSP's to buy or build a principal residence. Couples - including
common-law - will be able to withdraw up to $50,000
- To get the normal tax break for a contribution
and to use those funds under the plan, the money must be in your RRSP for
at least 90 days before a withdrawal is made.
- You have to meet the first-time buyer’s
condition. You are not considered a first-time home buyer if you or your
spouse owned a home that you occupied as your principal place of residence
in the past five years.
- Home buyers withdrawing funds do not have
to pay income tax on the amount withdrawn, as long as the funds are repaid
into an RRSP in the future.
- The 15-year repayment period will begin
in the second calendar year following the calendar year in which the withdrawal
is made. In addition, a qualifying home must generally be acquired before
October 1 of the calendar year following the year of withdrawal. For example,
those making withdrawals under the plan in 2009 will have until October
1, 2010 to acquire a qualifying home and their first annual repayment will
be due by the end of 2011 or the first two months of 2012.
- You can participate in the HBP more than
a) Your HBP balance for your previous participation is zero on January
1 of the year you want your new participation in the HBP to occur; and
b) You meet the first-time buyer’s condition and all other HBP
conditions that apply to your situation.
Canada Mortgage and Housing Corporation (CMHC)
insured mortgage loans are available to cover the purchase price of a home
as well as an amount to pay for immediate major renovations or other improvements
that the purchaser may wish to make to the property.
- The insured loan will be based on the
The purchase price plus the actual cost of improvements, or,
The “as improved” market value. Prior to approval, CMHC will
determine the market value of the property after renovations/ improvements.
The lending value will not exceed the market value of the property after
- Applicants must have the following:
- A minimum of 5% down payment of total cost (purchase price plus renovations/
- Cost estimates for renovations/improvements.
- Qualifications to obtain a CMHC insured loan through an approved lender.
Ask your Mortgage Broker for details or visit
CMHC at www.cmhc.ca
Homeowners may be eligible for a tax credit
when filing their 2009 tax return, of up to 15 per cent of eligible home
renovation expenditures between $1,000 and $10,000.
- The HRTC is a 15-percent non-refundable
tax credit that will apply to eligible home renovation expenditures for
work performed or goods obtained between January 27, 2009 and February
1, 2010. The credit may be claimed on the portion of eligible expenditures
over $1,000 but not more than $10,000, and can provide up to $1,350 in
- The credit can be claimed on eligible expenditures
incurred on one or more of an individual’s eligible dwellings. An
eligible dwelling is a housing unit that is eligible to be your principal
residence or that of one or more of your family members at any time between
January 27, 2009, and February 1, 2010. Eligible properties also include
cottages and condominiums that are owned for personal use.
- All expenses must be supported by receipts
and acceptable documentation. Documentation, such as agreements, invoices,
and receipts, must clearly identify the type and quantity of goods purchased
or services provided.
- Some examples of eligible expenses include:
- Renovating a kitchen, bathroom, or basement
- Windows and doors
- New carpet or hardwood floors
- New furnace, boiler, wood stove, fireplace, water softener, water heater,
or oil tank
- Central air conditioner
- Painting the interior or exterior of a house
- Building an addition, garage, deck, garden/storage shed, or fence
- A new driveway or resurfacing a driveway
- Associated costs such as installation, permits, professional services,
equipment rentals, and incidental expenses
- Generally, work performed by electricians, plumbers, carpenters, architects,
etc. in respect of an eligible expense qualifies.
- Some examples of ineligible expenses include:
- Furniture, appliances, and audio and visual electronics
- Purchasing of tools
- Carpet cleaning
- House cleaning
- Maintenance contracts (e.g., furnace cleaning, snow removal, lawn care,
and pool cleaning)
- Financing costs
Qualifying taxpayers can claim
the HRTC when filing their 2009 tax return.
Information compiled by the Oakville, Milton & District Real Estate
April 10, 2016
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