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First-Time Home Buyer Grant and Assistance Options in Canada

Sunday, October 6, 2024   /   by Teresa Pileggi

First-Time Home Buyer Grant and Assistance Options in Canada

First-Time Home Buyer Grant and Assistance Options in Canada

Buying your first home is exciting, but it can be stressful if you need more assets to finance your purchase. For most people, getting a mortgage is the easiest way to finance a home purchase.


However, the process is also challenging for young first-time buyers with poor credit history and financial records.


Fortunately, the Canadian government has made it easier for first-time home buyers to own properties through various grants and assistance programs. These programs range from tax credits and refunds to saving plans that offer new homebuyers financial relief. As an aspiring homeowner, here are the home buyer grants and assistance options you should know about.


What Are First-Time Home Buyer Grants and Assistance Programs?


First-time homebuyer grants and assistance programs are government-sponsored initiatives that allow eligible Canadians to buy homes affordably. These assistance options can be from federal, provincial, and local governments, as well as non-profit organizations, and make home purchases more affordable by covering down payment and closing costs. Unlike home loans, most grants and assistance programs do not require repayment, relieving new homebuyers of the financial burden of owning a home.


Eligibility criteria for these home-buying assistance options differ based on the government level and income limit. Therefore, with various initiatives available for new home buyers, here are the most common grants and assistance programs to consider.

1. First-Time Home Buyers' Tax Credit (HBTC)


The First-Time Home Buyers' Tax Credit (HBTC) or the Home Buyers'; Amount (HBA) is a federal government program that offsets the costs of buying your first home. The program was introduced in 2009 to help first-time buyers and those with disabilities claim a non-refundable tax credit of up to $10,000 (initially $5,000). It is also calculated at the lowest income tax rate of 15%, meaning the $10,000 claim results in a tax reduction of $1,500.


The amount may seem low when targeting a high-end home. However, the program reduces your home-buying costs by offsetting legal fees, closing costs, home inspections, and other related costs. This allows you to have more money in your account during the tax time.

To qualify for a Home Buyers' Amount (HBA), you must fulfill the following criteria:


? You or your spouse/common-law partner must have acquired a qualifying home in the tax year. A qualifying home can be an existing or new construction home, including single-family and semi-detached houses, townhouses, condominiums, and apartments.


? You or your spouse/common-law partner must be a first-time home buyer who has not lived in a qualifying home in the last four years.


? A qualifying home must be your principal residence within the first year after purchasing it.



2. Land Transfer Tax Rebate (LTTR)


Some provinces and municipals also charge home buyers land transfer taxes when they buy properties. The tax typically ranges between 0.5% and 2% of the property's size. However, the Canadian provincial and municipal governments have several tax rebate programs that allow first-time homebuyers to receive part or all of the land transfer tax they pay when buying homes.

The amount you receive as a Land Transfer Tax Rebate (LTTR) and the requirements vary from province to province. For instance, you must fulfill the following requirements to claim your LTTR in Ontario or Municipal Land Transfer Tax (MLTT) rebate in Toronto.


? You must be at least 18 years old and a Canadian citizen or a permanent resident (or become one within 18 months of the purchase).


? You should not have previously owned a home or showed an interest in a home anywhere.


? You must occupy the home as your principal residence within nine months of registering the title in your name.


? You must apply for the rebate within 18 months after registration.


Note: the maximum LTTR in Ontario is $4,000, while the MLTT rebate in the City of Toronto is $4,475.

3. RRSP Home Buyer's Plan (HBP)


The Home Buyers' Plan (HBP) allows first-time home buyers or those with disabilities to withdraw their tax and interest-free savings in the Registered Retirement Savings Plan (RRSP) to finance purchases. The program was introduced in 1992 with a withdrawal limit of $25,000. However, the limit was increased to $35,000 in 2009 and lately to $60,000 in April 2024. Unlike other non-refundable grants, HBP requires you to repay the amount withdrawn within 15 years, and you have five years after purchase to start making repayments. You must also repay at least 1/15 of the amount you owe yearly. If you repay less than the minimum 1/15, the remaining amount is added to the RRSP income and becomes taxable.

To be eligible for the RRSP Home Buyers 'Plan, you must meet the following conditions:


? Be a Canadian resident from when you withdraw your RRSP savings to when you buy or build a qualifying home.


? Have a written agreement to buy or build a qualifying home for yourself or your disabled relative.


? You or your disabled relative must intend to live in the home as your principal residence within one year of buying or building it.


? You must have closed on a home purchase within the last 30 days.


? If you previously participated in the HBP, you can do so again if your balance is zero on January 1st of the year you plan to withdraw again. However, you must meet all other eligibility conditions, including being a first-time home buyer under the Income Tax Act.


4. GST/HST New Housing Rebate (NHR)


If you buy a newly built home or renovate your principal residence, you will likely pay a goods and services tax (GST) or harmonized sales tax (HST), depending on your province. Both taxes can add a financial burden to your dream. However, the good news is that, as a first-time homebuyer, you can qualify for one of the two tax rebates that can save you thousands of dollars.


The GST or HST New Housing Rebate (NHR) allows you to claim a portion of the provincial or federal HST you pay when buying a home. The amount you claim depends on the province and whether you paid the HST when purchasing or leasing the land. Also, rebates are among the most complex assistance programs to calculate because their final figures depend on the home's fair market value and the current provincial GST or federal HST. Some provinces also have the maximum rebates you can claim when buying a new home or renovating your principal residence. For instance, Ontario has its NHR on owner-built dwellings limited


to a maximum of $24,000 if you paid HST when buying the land and $16,080 if you didn't.

To be eligible for the GST/HST NHR, you must meet various conditions, including the following.


? The home must be your principal residence as soon as it is habitable.


? You must be a Canadian resident.


? The home's price must be at most $450,000. However, if the province offers a home above this threshold, you can still qualify for a provincial rebate.


? The rebate only applies to individuals, not corporations, businesses, and partnerships.

The Bottom Line


First-time homebuyer grants and assistance programs offer essential support to individuals who dream of owning homes. By utilizing these options, you can receive back thousands of dollars spent on property taxes, closing costs, down payments, and legal fees. Always research these programs and understand their specific requirements before going for them. You can also work with your real estate

professional or financial advisor to understand which programs you may qualify for.

Pileggi Real Estate Team - eXp Realty
Tom Pileggi, Broker
P.O. Box 1665
Holland Landing, ON L9N 1P2
416-917-6566

Information is provided exclusively for consumers’ personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Data is deemed reliable, but is not guaranteed accurate by the MLS®. Copyright 2025 Last Updated February 12, 2025
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