Four Government Plans to Help You Buy A House
There are lots of government plans to help you buy a home in Canada, especially for First-Time Home Buyers. If you’re thinking about buying your first house, don’t miss out on being able to take advantage of these plans if you’re eligible.
First Time Home Buyers Incentive
What’s the First-Time Home Buyers Incentive
This incentive is a shared equity instrument from the Canadian Government to support residents in acquiring homeownership. It will add 5%-10% of the subject properties worth to your down payment. You’ll get the money up front at the time of purchase, in a way it’s like a second mortgage.
Do I have to repay?
Yes, it is an advancement although is beneficial at the time of purchase because it increases the amount you put down as a down payment. There are no partial payment plans, so you will have to repay the amount in full after 25 years or when you sell the home. You’ll be repaying the government 5%-10% of the property market value at the time of repayment. In the case of:
Appreciation of the property: you’ll repay the incentive amount plus 8% gain per annum (not compounded) from the date of advancement to the time of repayment.
Depreciation of the property: you’ll repay the incentive amount and a maximum loss of 8% per annum (not compounded) from the date of advancement to the time of repayment.
How do I qualify?
Here is a checklist to see if you qualify for the First-Time Home Buyer’s Incentive:
You’ve never purchased a home (hence, First-Time Home Buyer)
You have not occupied a home that you or your spouse or common-law partner has owned in the last 4 years.
You’ve experienced a marriage separation/divorce or a breakdown of a common-law partnership (even if you don’t meet the other requirements)
Your income is less than $120,000 per annum
Your borrowing amount is less than 4x your qualifying income
You are authorized to work in Canada (citizen, permanent resident etc.)
You must occupy your home after purchase, the incentive can not be used toward an investment property.
2. Home Buyers’ Amount
What is the Home Buyers’ Amount?
You can claim up to $10,000 for the purchase of a qualifying home in 2022 and claim a non-refundable tax credit of up to $1,500.
How do I qualify?
You can claim this amount if:
You (or your spouse/common-law partner) bought a qualifying home
You have not lived in another home that you or your partner owned in the last four years.
What is a qualifying home?
It must be registered in you or your partner’s name in the land registration system and must be located in Canada.
Single-family houses
Semi-detached houses
Townhouses
Mobile homes
Condo units
Apartments
How do I redeem this?
When filing your taxes, you’ll enter $10,000 on line 31270 of your return. $10,000 is the maximum amount you and your spouse can claim. You are able to split that amount between both your returns, although the amount claimed cannot exceed $10,000.
Don’t forget to keep any records pertaining to your home purchase in the event the CRA requires them for confirmation.
3. GST/HST New Housing Rebate
If you purchased a new build home or a house that was substantially renovated, you may be eligible for a GST/HST rebate.
Am I eligible?
You’re eligible if:
You purchased an owner-occupied newly built home or a house that was substantially renovated from a builder.
You purchased shares in a new or substantially renovated co-operative housing corporation with the purpose of using the unit as your primary place of residence.
If the fair market value of your home if less than $450,000 at the time that construction is completed, you can claim this benefit is your constructed or renovated your home or hired someone to do it.
More information:
The GST/HST new housing rebate applies to cover some of the GST paid or the federal part of the HST paid. Certain provinces may have other incentives to cover the provincial part of the HST paid.
This program does not apply to corporations or partnerships, only individuals.
4. Home Buyers’ Plan (HBP)
This program allows you to withdraw up to $35,000 from your Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home.
Conditions:
You are the owner of the RRSP account and you pay back the funds within 15 years.
Must be considered a first time home buyer.
You must have a written agreement to purchase or build the qualifying home
Must be a resident of Canada.
The qualifying home must be your primary residence within a year of buying or building it.
You may be eligible to use the HBP if you have already used it, IF your repayable HBP balance is zero and you met all the other criteria.
Sources:
https://www.canada.ca/en/revenue-agency/services/tax/individuals/segments/homeowners.html
https://www.placetocallhome.ca/fthbi/first-time-homebuyer-incentive
