March 13, 2012
First-time home buyer aid for newbies
Real estate help for newbies
Once upon a time, I was shoe shopping at a local mall, when a pair of running shoes grabbed my attention. I was smitten, so I grabbed the shoes and went to the register. A few weeks later, I passed the very same shoe store, in my new shoes, and was dismayed to see the shoes at 50% off. I was crushed – I paid an extra 50% for the same shoes.
Does this situation sound familiar? Sadly, this is a common occurrence in malls across Canada. This can also occur on a grander scale when you buy a home for the first time. Breaking into the real estate market as a first-time home buyer requires a big learning curve, which is why it is important to learn about all the possible programs designed to help you and reduce the financial burden.
The First-time Home Buyer Tax Credit (HBTC)
This tax credit is probably the most straightforward, yet least known of all the first-time home buyer rebates. It is a non-refundable $750 tax credit that must be claimed on your personal income tax. If you are purchase your home with a partner or spouse, both of you can claim the HBTC, however, the total of your combined tax credit cannot exceed $750.
The RRSP Home Buyers’ Plan (HBP)
This is probably the most well-known first-time home buyer freebie. The Government of Canada allows you to withdraw money from your RRSPs completely tax-free. You may borrow up to a maximum of $25,000 and if you’re buying with a partner or spouse, each of you may withdraw $25,000 for a total of $50,000. Since you are taking money from your RRSP, it does need to be re-paid in full after 15 years.
Land Transfer Tax Rebates
Each province in Canada levies a type of land transfer tax when you engage in property, land, or housing transactions. The tax rate is different in each province, which is why it is helpful to use a land transfer tax calculator. Not all provinces have land transfer taxes; some require small title fees such as Alberta while others are incredibly complex such as Manitoba.
If you plan on buying in the city of Toronto, be prepared for an additional land transfer tax at the municipal level, however, it will likely be abolished by 2015. There are four governments that charge land transfer tax AND provide rebates for first-time home buyers. They are the provinces of Ontario, British Columbia, Prince Edward Island and the City of Toronto, so make sure to use a calculator to verify which rebates you are entitle to.
As a newbie home buyer, you should take advantage of the numerous freebies made available to you. Paying a few extra dollars on a pair of running shoes isn’t as bad as paying a few thousand extra dollars on a house.
About the Contributor
This article was provided by RateHub.ca, an independent, impartial mortgage rate comparison platform. We bring the most competitive mortgage rates to one place, so you can make informed and efficient decisions. We believe that finding the best mortgage rate should be straight-forward, and our website has been designed with that in mind. RateHub works with the top mortgage brokers and lenders in Canada to bring you the most competitive mortgage rates. We update our rates on a daily basis with accurate, real-time data. We also provide ongoing mortgage education and resources to assist you in your selection process.