Buying a home for the first time can be expensive. Luckily, there are many government grants, tax credits and incentives available to help out first time home buyers in Canada.
Taking advantage of first time home buyer grants in Canada as well as other government subsidies and incentives is the smart way for first time home buyers to save money. There are many government incentives available for first time home buyers in Canada including tax credits, housing rebates and Canada’s Home Buyers’ Plan. New home owners must take advantage of these programs with a specific time period to qualify.
Any first time home buyers who purchased a home after January of 2009 may qualify for a First Time Home Buyers’ Tax credit. This is a tax credit that can be applied to your income tax, and must be claimed during the same year that the home is purchased. Many different homes qualify for this tax incentive including new constructions, single family dwellings, condos, apartment buildings and even mobile homes. The person claiming the tax credit must live in the home that’s being claimed. The amount of money you can receive from this tax credit is determined by multiplying $5000 by your own personal tax rate and must be claimed on personal income tax return documents.
The GST/HST New Housing Rebate is another program available from the Canadian government that helps first time home owners get into a new home. This program applies to new constructions or homes that have undergone significant renovations. You have up to 24 months to claim your rebate after purchasing your home. This rebate can cover some of the costs of construction like materials and the land the home is built on. To qualify, your home must be worth less than $450,000 at fair market value.
The Home Buyers’ Plan is another great way for first time home buyers to save on their new homes. Under this plan, home owners are able to withdraw up to $25,000 from their Registered Retirement Savings Plan to help pay for the costs associated with purchasing a home, with absolutely no tax penalty for early withdrawal. The only catch is that the money must be in your RRSP account for 90 days before it can be withdrawn and used towards the purchase of a new home.