The federal government's Home Buyers' Plan (HBP) is a program that
allows you to withdraw money from your registered retirement savings
plan (RRSPs) to buy or build a qualifying home. This money is NOT TAXED
as income as it would normally be, but you do have to pay it back. You
have 15 years to repay the money, starting 2 years after the initial
withdrawal. To stimulate the home buying market, the maximum for such withdrawals made after January27, 2009 has been increased to $25,000.
The conditions: The purchase must be for a principal residence, you
can take the cash out up to 30 days after buying the home, or if you
take it out beforehand, you must own or build the home by October 1st of the following year.
NB: For this plan the government defines a first-time buyer as someone who has not owned a home that they occupied as their principal place of residence during the period beginning January 1 of the fourth year before the
year of withdrawal and ending 31 days before your withdrawal.
So basically if you owned a home 5 years ago, or had a property that
wasn't your principal residence, you are still considered a first-time
buyer.
For more info on the HBP, go to the Canada Revenue Agency's website at www.cra-arc.gc.ca
Land Transfer Tax Refunds
for first-time buyers
The Ontario government also helps first-time home buyers (which it
defines more strictly as having never owned a home ever, anywhere) by
offering a refund on your Provincial Land Transfer Tax, up to a maximum
of $2000. (Equivalent to the Provincial Land Transfer Tax on a
$227,500 home)
If you are buying in the City of Toronto, it has its own additional
pesky Municipal Land Transfer Tax as well, with its own rebate for
first-timers that maxes out at $3725.
First-Time Home Buyers Tax Credit (HBTC)
The costs associated with purchasing a home can be a particular
burden for first-time home buyers, who must pay these costs on top of
saving the money for a down payment. Closing costs include one-time
items such as lawyer fees, HST (on newly constructed homes), and
adjustments (e.g. taxes or utilities prepaid by the seller) that allow
you to complete the house purchase.
To assist first-time home buyers with these costs, the 2009 federal
budget introduced a First-Time Home Buyers Tax Credit, a $5,000
non-refundable income tax credit (inserted in a new line on tax returns
starting in 2009) that will result in $750 in federal tax relief.
