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Government help for the first-time homebuyer

Recognizing the value of homeownership to Canadians, the federal and provincial governments offer incentives to help first-time homebuyers get their financial footing.

Here are some popular offerings that thousands of Canadians have taken advantage of:

Home Buyer's Plan

One of the most well known, utilized programs is the Home Buyer's Plan. This plan allows eligible people to withdraw up to $25,000 tax free from their Registered Retirement Savings Plan (RRSP) to purchase or build a qualifying home.

To qualify as a first-time home buyer you cannot have owned a home as a principal residence for four years before the date of the withdrawal of funds.

People using this plan have to start repaying the amount two years after withdrawing the funds and the entire amount must be repaid within 15 years.

Tax-free savings account

Tax-free savings accounts (TFSA) allow people to save money and not pay tax on any interest accrued. This is a great way to save for a down payment on a home as the money is often more accessible than an RRSP.

GST New housing rebate program

Newly built homes are subject to five per cent GST but there are some circumstances when you may be eligible to claim a rebate for a part of the GST you pay on the purchase price or cost of building your home.

If the home you buy is less than $350,000, you can claim a GST rebate to a maximum of $8,750. For homes priced between $350,000 and $450,000, the GST rebate is reduced proportionately. New homes priced at $450,000 or higher (before GST) would not receive a rebate.

Home Buyers' Tax Credit (HBTC)

Like the Home Buyers' Plan, if you haven't lived in another home owned by you or your spouse or common-law partner in any of the four preceding years and you acquire a qualifying home (i.e., a housing unit located in Canada that will be your principal residence), you can claim an amount of $5,000 for the Home Buyers' Tax Credit (HBTC). This provides up to $750 in federal tax relief.

This initiative is designed to help first-time homebuyers with the costs associated with the purchase of a home such as legal fees, land transfer taxes, etc.

This tax credit is claimed on income tax returns in the year you purchase a home. There is also opportunity for individuals who require wheelchair accessible homes to claim this tax credit.

Land Transfer Tax Credit

Ontario, British Columbia and Quebec residents can also make a provincial tax credit claim if you are purchasing a home as a principal residence as long as you and your spouse or common-law partner has never owned a home, or an interest in a home, anywhere in the world. Check out your provincial government website for deadlines and applications.

 

For more information visit:

Home Buyer's Plan:

http://servicecanada.gc.ca

Home Buyer's Tax Credit:

http://actionplan.gc.ca

Posted on Tuesday, June 26, 2012 at 11:34AM by Registered CommenterElaine in | CommentsPost a Comment

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