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First Time Home Buyer Rebate and Purchase Incentive Programs available in Ontario

First Time Home Buyer Programs available in Ontario

1. First Time Home Buyer Land Transfer Tax Rebate
2. First Time Home Buyers Tax Credit
3. 5% Down Payment Program
4. RRSP Home Buyers Program
5. CMHC Purchase Plus Improvements Program
6. Home Renovation Tax Credit

1.  First Time Home Buyer Land Transfer Tax Rebate

You may be eligible for a refund of up to $2,000 on the land transfer tax payable on your purchase.

Details

• 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 home/ 

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.

Details:

• 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.

More details on this program at http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhbtc-eng.html


 3.  5% Down Payment Program

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.

Details:

• 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 mortgage.
  
• 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
   

4.  RRSP Home Buyers Program

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 home.
• 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.

Details:

• 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 once if:
  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.
  

5.  CMHC Purchase Plus Improvements Program

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. 

Details:

• The insured loan will be based on the lower of:
  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 renovations/ improvements.
   
• Applicants must have the following:
  - A minimum of 5% down payment of total cost (purchase price plus renovations/ improvements).
  - 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

 

6.  Home Renovation Tax Credit

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.

Details:

• 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 tax relief.
• 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 Board

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