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The Government Wants to Help You Afford Your First Home!

government home buying help

If you are not accustomed to finding the words “government” and “help” joined together, you are in for a pleasant surprise in this post!

As it turns out, the Ontario government is quite keen to help first-time homebuyers afford their first home.

There are several reasons for this. First, buying a home helps you put down roots in Ontario, where it is assumed you will contribute to the local economy and community.

Next, buying a home keeps the real estate market hot (it is already quite hot, as this recent post highlights, but still, every little bit helps!).

Also, whenever someone buys a home in Ontario, this is a great chance for the government to encourage upgrading to more energy-efficient options.

In this article, learn about the different government-sponsored rebates, credits, incentives, and special funding options for you if you are a first-time homebuyer!

NOTE: These government-sponsored programs are a great addition to the creative ways to finance your first home, found in this blog post.

First-Time HomeBuyer’s Credit

This program features a tax credit that can help lower the costs you pay at closing time.

Here is what you need to know:

  • The credit is for 15 percent of your total closing costs up to $5,000.

  • This makes the maximum amount of the credit you can receive $750.

  • The credit MUST be taken the same year you purchase the home.

  • You MUST occupy the home within that same purchase year.

  • You are eligible if you have not owned a home at any time in the past (this also applies to a partner or spouse if you co-sign on the mortgage).

  • You must be at least 18 years of age and a citizen and resident of Canada.

  • Visit the Canada Revenue Agency to learn more.

Home Buyer’s Plan (HBP)

This federal government plan permits special withdrawal of Registered Retirement Savings Plans (RRSPs) to buy your first home.

Here is what you need to know:

  • You can withdraw up to $25,000 from your RRSP for the purposes of buying your first home.

  • If you have a co-signer on your mortgage, that individual can also withdraw the same amount for the same purpose.

  • The funds must be repaid within 15 years or any remaining balance will then be taxed like ordinary income.

  • You may repay the funds as quickly as you like and your repayment must start in Year Two (the year after you make the withdrawal).

  • Your RRSP annual contribution limits do not change based on your participation in this special program.

  • You must withdraw the funds within 30 days of purchasing your first home.

  • If your home is not yet built, you must be in possession of a written buy agreement.

  • You must be a resident of Canada.

  • Not all types of RRSPs can participate (i.e., locked plans cannot participate).

  • Visit the Canada Revenue Agency http://www.cra-arc.gc.ca/hbp/ to learn more.

Land Transfer Tax Refund (LTT)

Whenever you purchase property in Ontario, you are required to pay what is called “land transfer tax.” This tax is assessed on a sliding percentage scale based on the valuation of the property. Typically, your real estate broker and lawyer will help you calculate and submit this payment at the time of closing.

But if you are buying a home for the very first time, you may not have to pay this tax.

Here is what you need to know:

  • If you have co-buyers who are not first-time homebuyers like you are, you will only receive a portion of the LLT refund that is equivalent to your share of interest in the property.

  • You can receive up to $4,000.

  • You are not required to pay any land tax on the first $368,000 in value of your new property.

  • You must be 18+ years old.

  • You must occupy the home within nine months of the purchase date and declare that home as your principal residence.

  • You must be either a permanent Canadian resident or a Canadian citizen to qualify.

  • You must apply for your refund within 18 months of the date of disposition (whether registered or not).

  • Visit the Ontario Ministry of Finance to learn more.

GST/HST New Housing Rebate Program

GST stands for “goods and services tax.” HST stands for “harmonized sales tax.” In some provinces, these taxes are assessed separately. But in Ontario and several other provinces, these two taxes are assessed together in one lump sum.

Here is what you need to know:

  • Your refund will come from the federal part of the tax.

  • The eligible home must be listed as your primary residence.

  • The rebate is only for individuals—corporations and partnerships are not eligible.

  • Visit the Canada Revenue Agency to learn more.

Energy Efficiency Tax Credit

This program is designed to support the upgrade to energy-efficient products and services. It is open to previous and current homeowners as well as first-time homebuyers.

Here is what you need to know:

  • A variety of programs exist. Some cover mortgage insurance while others cover new appliance purchases or home energy audits.

  • The Canada Mortgage and Housing Corporation (CMHC) offers refunds of up to 25 percent on mortgage insurance premiums for compliant houses.

  • National Resources Canada (NRC) offers a searchable database of eligible Energy Star-related rebates and incentives.

Give Us a Call

Here at Voortman Realty, founder Calvin “Cal” Voortman has more than a quarter-century of real estate expertise, including how to get the most home for the least investment.

This expertise includes knowing the latest information about tax credits, refunds, incentives, and rebates, and how to determine if you and your new property are eligible. Give us a call at 905-628-6701.

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