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A home is usually the single largest investment that most people make in their lives. Achieving your dream can be made easier by taking advantage of various Government Programs for home buyers and property owners. Some of the programs are targeted to first-time buyers, while others apply more generally. Other programs benefit those in the industrial, commercial and multi-unit property market. Your REALTOR can provide information on these programs and help you to determine your eligibility.
Canada Mortgage and Housing Corporation (CMHC) insured mortgage loans are available to cover the purchase price of a home as well as an amount to pay for immediate major renovations or other improvements that the purchaser may wish to make to the property.
This option eliminates the need to obtain secondary financing after the purchase to pay for improvements. The homebuyer obtains a single first mortgage, makes a single mortgage payment, and benefits from first mortgage interest rates.
The insured loan will be based on the lower of:
|Maximum Mortgage (95%)
|Minimum 5% down payment
For more information call CMHC at (416) 221-2642 or www.cmhc.ca.
The Home Buyers' Plan (HBP) is a program that allows you to withdraw up to $35,000 in a calendar year from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. Couples and common-law partners can withdraw up to $35,000 each.
For example: Alex and Michelle, young couple, can withdraw up to $35,000 from their RRSPs for a total of $70,000, allowing them to contribute more towards their down payment.
Note: Budget 2019 proposes to increase the Home Buyers' Plan withdrawal limit to $35,000. This would be available for withdrawals made after March 19, 2019.
Note: Even if you or your spouse or common-law partner has previously owned a home, you may still be considered a first time home buyer.
The four year period begins on January of the fourth year before the year you withdraw funds. It ends 31 days before the date you withdraw the funds. For example: If you withdraw funds on March 31, 2019, the four-year period begins on January 1, 2015 and ends on February 28, 2019.
Participate in HBP again:
If you have previously participated in the HBP, you may be able to do so again if your repayable HBP balance on January 1st of the year of the withdrawal is Zero and you meet all the other HBP eligibility conditions.
Withdrawal of Funds:
If you receive a withdrawal in one year and another in January of the following year, we consider the January withdrawal to have been received in the year the first withdrawal was made.
If the January withdrawal is received before you acquire your qualifying home, or no later than 30 days after you acquire it, and all the other relevant conditions described in the chart below are met, it is an eligible withdrawal. For this purpose, your HBP balance on January 1st is not a relevant condition and does not have to be zero.
If you meet the applicable HBP conditions, you cannot withdraw more than $25,000. Your RRSP issuer will not withhold tax from the funds you withdraw that total $25,000 or less.
An amount exceeding $25,000 will have to be reported as income on your income tax and benefit return for the year you received it. In addition, your RRSP issuer will have to withhold tax on the amount in excess at the time of the withdrawal.
If you participate in the HBP, certain rules limit the deduction of your RRSP contributions made during the 89 day period before you withdrew funds under the HBP. Under these rules, you may not be able to deduct part or all of the contributions made during this period for any year.
Repay the Funds withdrawn:
Note: Home buyers withdrawing funds do not have to pay the income tax on the amount withdrawn, as long as the funds repaid into an RRSP in the future.
Existing homeowners can use the HBP to purchase a more accessible home or a home for a disabled dependent relative where the individual withdrawing the funds:
With as little as a 5% down payment, from personal or other sources (see below for eligible other sources), all home buyers have access to mortgage insurance enabling then to enter the housing market, as long as they can manage the costs of home ownership.
For more information call CMHC at 1-800-668-2642 or access through www.cmhc.ca
You may be eligible for a new housing rebate for some of the GST/HST paid if you are an individual who: built, or engaged someone else to build, a house on land that you already owned or leased
The GST/HST new housing rebate allows an individual to recover some of the goods and services tax (GST) or the federal part of the harmonized sales tax (HST) paid for a new or substantially renovated house that is for use as the individual's, or their relation's, primary place of residence, when all of the other conditions are met. Additionally, other provincial new housing rebates may be available for the provincial part of the HST whether the GST/HST new housing rebate for the federal part of the HST is available or not.
In certain circumstances, a transitional new housing rebate may be available in addition to any GST/HST new housing rebate and provincial new housing rebate for which you may be eligible, even if the house is not your primary place of residence.
The new housing rebate is not available to a corporation or a partnership.
For more information, see Guide RC4028, GST/HST New Housing Rebate.
In the GTA, most builders include the HST in the price of the house, and any rebate would be assignable to the builder as they would be absorbing the net HST cost.
When you buy land or an interest in land in Ontario, you pay land transfer tax. First-time homebuyers of an eligible home may be eligible for a refund of all or part of the tax:
For conveyances or dispositions that occur before January 1, 2017, the maximum amount of the refund is $2,000.
Beginning January 1, 2017, the maximum amount of the refund is $4,000. The increased limit of $4,000 applies only to conveyances or dispositions that occur on or after January 1, 2017, regardless of the date the agreement of purchase and sale was signed.
Beginning January 1, 2017, no land transfer tax would be payable by qualifying first‑time purchasers on the first $368,000 of the value of the consideration for eligible homes. First‑time purchasers of homes greater than $368,000 would receive a maximum refund of $4,000.
The refund will be reduced if one (or more) of the purchasers is not a first‑time homebuyer. The refund will be proportionate to the interest acquired by the individuals who qualify for the refund.
To qualify for a refund:
A qualifying purchaser must apply for the refund within 18 months after the date of registration of the conveyance or the date the unregistered disposition occurs.
For more information call the Ontario Finance Ministry at 1-800-263-7965.
|These four portions added up together total the LTT payable. A simple formula is as follows:
|Calculation of LTT
|$0 to $55,000
|0.5% x purchase price
|$55,001 to $250,000
|(1% x purchase price) minus 275
|$250,001 to $400,000 (residential)
$250,001 plus (business)
|(1.5% x purchase price) minus 1525
|$400,001 plus (residential only)
|(0.2% x purchase price) minus 3525
|**If the purchase price falls within this range, then apply the appropriate formula to the purchase price. For example on a $200,000 property, the LTT calculation would be [(1% x $200,000) minus 275 = $1725].
The First-Time Home Buyer Incentive helps qualified first-time homebuyers reduce their monthly mortgage carrying costs without adding to their financial burdens.
There are a few qualifiers to apply for this incentive:
If you meet these criteria, you can then apply for a 5% or 10% shared equity mortgage with the Government of Canada. A shared equity mortgage is where the government shares in the upside and downside of the property value.
How does it work?
The Incentive enables first-time homebuyers to reduce their monthly mortgage payment without increasing their down payment. The Incentive is not interest bearing and does not require ongoing repayments.
Through the First-Time Home Buyer Incentive, the Government of Canada will offer:
|Incentive by Property Type
|5% or 10%
|New or re-sale mobile/manufactured home
The total amount of funding will be $1.25 billion over 3 years.
Note: The program is expected to be ready to receive Incentive applications starting September 2, 2019. If approved for the Incentive, the purchase transaction must close on or after November 1, 2019.
Let’s look at a specific situation*
Anita wants to buy a new home for $400,000. She’s saved the minimum required down payment of $35,000 (5% of the purchase price).
Under the First-Time Home Buyer Incentive, Anita can apply to receive $40,000 in a shared equity mortgage (10% of the cost of a new home) through the program.
This lowers the amount Anita needs to borrow and reduces the monthly expenses.
As a result, Anita’s mortgage is $228 less a month or $2,736 a year.
Ten years later, Anita sells her home for $420,000. The Incentive will need to be repaid as a percentage of the home’s current value.
This would result in Anita repaying 10%, or $42,000 at the time of selling the house.
For more information, see First-Time Home Buyer Incentive
The First-Time Home Buyer Tax Credit offers a $5,000 non-refundable income tax credit amount on a qualifying home acquired after January 27, 2009. For an eligible individual, the credit will provide up to $750 in federal tax relief. Go to the Home Buyers’ Credit section to see if you are eligible.
You can claim $5,000 for the purchase of a qualifying home in the year if both of the following apply:
For more information, see Home buyers' amount.