Take Advantage of First-Time Home Buyer Incentives

Becoming a first-time condo buyer can be financially overwhelming, but it doesn’t have to be! The government offers first-time homebuyer incentives such as the Home Buyers Plan, First-Time Home Buyer Incentive, and the Home Buyer Tax Credit to help buyers purchase their first property.

Home Buyers’ Plan (HBP)

The federal Home Buyers’ Plan allows first-time homebuyers to withdraw up to $35,000 tax-free from their registered retirement savings plan (RRSP). If two partners purchase together, they can access up to $70,000 from RRSP, tax-free.

To qualify, you must

• be considered a first-time homebuyer
• have a written agreement to buy or build a home
• be a Canadian Citizen
• intend to occupy your new home as your principal place of residence within one year after buying or building it
• RRSPs contributions must be in your RRSP account for at least 90 days before withdrawal for HBP purposes

To withdrawal from your RRSP account, you must fill out Form T1036 from your financial institution. Repayments must be fully paid within 15 years after the initial withdrawal. The repayment starts the second year after you withdrew funds from your HBP.

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First-Time Home Buyer Incentive

First-time home buyers may be eligible for a shared equity mortgage with the government of Canada while offering financing without any interest which helps reduce monthly mortgage payments.

The Government of Canada will offer to first-time home buyers the following:

• 5% of the purchase price of a resale home
• 5% or 10% of the purchase price of a newly constructed home

The incentive must be repaid within 25 years or when the property is sold. This means that you pay back the same percentage of the value of your home. For example: you receive a 10% incentive of the home’s purchase price of $600,000, or $60,000. If your home value increases to $750,000 your payback would be 10% of the current value or $75,000.

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First-Time Home Buyers Tax Credit

Also known as the Home Buyers’ Amount. You and/or your spouse can claim a combined $5,000 non-refundable tax credit which is a $750 tax reduction. You must claim the credit through your income tax return.

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