First Time Home Buyers
Buying property can sometimes seem out of reach, especially in Toronto. But the government has a few programs to help out first time home buyers...
Land Transfer Tax Rebates (Provincial & Toronto)
First time buyers are eligible to receive rebates of the provincial and Toronto land transfer taxes. There are maximum LLT rebates for both- $2000 for provincial and $3725 for Toronto (equivalent to the Toronto LTT payable on a $400,000 property).
Provincial LTT
(Ontario Ministry of Finance 1-800-263-7965)
- Payable anywhere in Ontario
- For Resale homes, the provincial rebate applies only to first-time buyers who entered into Agreements of Purchase and Sale after Dec 13, 2007.
- For Newly Constructed homes, buyes are eligible for the rebate even if they entered into Agreements of Purchase and Sale before Dec 13, 2007.
- The provincial LTT for residential properties is calculated as follows (an easy-to-use calculator is available at www.NoHomeBuyingTax.com):
0.5% of purchase price amount up to $55,000
+ 1% of purchase price amount between $55,000 and $250,000
+1.5% of purchase price amount between $250,000 and $400,000
+2% of purchase price amount above $400,000
Toronto LTT
(City of Toronto 416-338-0338)
- Payable only for properties in the City of Toronto
- Toronto LTT rebates are in addition to any provincial LTT rebates the buyer qualifies for
- The Toronto LTT for residential properties is calculated as follows
0.5% of purchase price amount up to $55,000
1% of purchase price amount between $55,000 and $400,000
2% of purchase price amount above %400,000
First Time Home Buyers' Tax Credit
First time home buyers may be eligible for a 15% income tax credit for closing costs.
- To assist with the costs related to the purchase of a home
- The FTHBC provides a 15% tax credit on a maximum of $5000 of home purchase costs (legal fees, land transfer taxes, etc.), meaning maximum taz releif 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
First Time Buyer Eligibility
- The purchaser must be atleast 18 years of age
- The purchaser must occupy the home as his or her principal residence no later than 9 months after the date of the conveyance or disposition.
- The purchaser cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time.
- If the purchaser has a spouse, the spouse cannot have owned a home, or had any ownership interest in a home, anywhere in the world while he or she was the purchaser's spouse. If this is the case, no refund is available to either spouse. Note: If a purchaser's spouse owned an interest in land before becoming the purchaser's spouse, but not while the purchaser's spouse, the purchaser may be eligible for some rebate.
5% Down Payment Program
With as little at 5% down payment, all home buyers have access to mortgage insurance enabling them to enter the housing market, as long as they can meet the standards for a 5 year fixed mortgage.
- Mortgage insurance is available to both first time and repeat buyers.
- Depending on elibibility, buyers may consume up to 39% of their gross monthly household income for payments of principal interest, property taxes and heating, and total debt load cannot exceed 44% of monthly householf income.
- Insurance premiums on loans or 95% of the lending value of the house where the 5% down payment comes from personal sources will be 2.75% of the mortgage loan, and when from other sources will be 2.9% of the mortgage loan.
- Borrowers are requried to demonstrate at the time of application, their ability to cover closing costs equal to at least 1.5% of the purchase price.
- The maximum amount that can be withdrawn if re-financing their mortgage is 80% of the value of their home.
- The program is not available for non-owner occupied properties. These properties require a minimum down payment fo 20%.
- Government-backed insured mortgages are not available for homes with a purchase price of more than $1 million or more.
- Effective July 9, 2012, the maximum allowed amortization period for mortgages with less than 20% down payment is 25 years.
(For more info call CMHC at 1-800-668-2642 or visit cmhc.ca)
RRSP Home Buyers' Plan
The Home Buyers' Plan is a program under which you can withdraw up to $25,000 from your registered retirement savings plan to buy or build a qualifying home.
Withdrawals don't have to be included in your income. However, before you withdraw funds you must have entered into a written agreement to buy or build a home which you must occupy no later than 1 year after buying or building.
- If you buy with a spouse or other individuals, you may ach withdraw $25,000.
- You have to meet the first-time buyer's condition. You are not considered a first-time buyer if you or your spouse owned a home that you occupied as your primary residence in the last 5 years.
- Buyers withdrawing funds do not have to pay income tax on the amount, 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 year in which the withdrawal is made.
- The money must be in your RRSP for at least 90 days before a withdrawal is made in order to get the tax deduction.
*Information courtesy of the Toronto Real Estate Board
