If purchasing a home is on your radar, you should be informed about the latest government programs available to you to secure that dream home. With mortgage rates increasing, it is becoming more difficult to close on that perfect home due to financing conditions. The Government of Canada, the Quebec government and various cities, including Montreal offer a number of government programs for first-time home buyers that help homebuyers save on the purchase of their first home. From tax-credits to down-payment plans, to even receiving a lump-sum payment for first-time buyers, there are a wealth of programs available to save the first-time buyer money on their first home.
First Time Home Buyer RRSP
The Canadian government's Home Buyers' Plan (HBP) allows first time home buyers to borrow up to $25,000 from your RRSP for a down payment, tax-free. If you're purchasing with someone who is also a first time homebuyer, you can both access $25,000 from your RRSP for a combined total of $50,000. How do you qualify for HBP eligibility?
- You must be considered a first-time home buyer.
- You must have a written agreement to buy or build a qualifying home for yourself, for a related person with a disability, or to help a related person with a disability buy or build a qualifying home (obtaining a pre-approved mortgage does not satisfy this condition).
- You must intend to live in the qualifying home as your principal place of residence within one year after buying or building it. If you buy or build a qualifying home for a related person with a disability, or help a related person with a disability buy or build a qualifying home, you must intend that that person lives in the qualifying home as his or her principal place of residence.
When do you start making repayments? Your first repayment starts the second year after the year you withdrew funds from your RRSPs for the HBP. Generally, you have up to 15 years to repay to your RRSP the amounts you withdrew from them under the HBP. However, you can repay the full amount into your RRSP or PRPP at any time. Each year, the CRA will send you a Home Buyers' Plan (HBP) Statement of Account, with your notice of assessment or notice of reassessment.
For more detailed information visit the CRA site at http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html.
First-Time Home Buyers Tax Credit (HBTC)
The Canadian government offers a First-Time Home Buyers Tax Credit for qualifying buyers and qualifying homes. You can claim up to $5000 against your income to a maximum refund of $750 if you and/or your spouse bought a qualifying home. In order to qualify as a first-time buyer neither you nor your spouse could have owned a home in the current year or the four years preceding the current year. In the case of a person who has a disability, if the home helps the person live in a better environment suited to their needs and care, they also qualify, even if they owned a home in the current year or the four years preceding. The same applies to anyone buying a home for a disabled relative. A qualifying home for first-time buyers can be an existing or new home (detached, townhome or semi-detached), condo, apartment, or co-op in Canada as long as it is in the first-time buyers (or their spouse’s) name. Either or both of the spouses can claim the tax credit and even if you buy with qualifying friends, you can divide the claim, to a total of $5000.
If you are a first-time buyer or looking to purchase a home for a disabled relative, you can check out the Canada Revenue Agency’s HBTC website.
GST | QST New Housing Rebate
When you purchase a new home or condominium in Quebec you are required to pay GST and QST taxes on the purchase, which you would not have to pay if you purchase an existing home from the previous owner, as long as they are not a business. The same applies to the costs to substantially renovate your existing home. If you purchase a new home or condominium up to a maximum of $450,000 for the GST and up to $300,000 for the QST, you can claim the New Housing Rebate. You can claim up to a maximum of 36% of the GST and 36% of the QST paid (up to a maximum of $6,300), however for the GST the amount you can claim decreases for homes priced $350,000 or more and likewise for the QST on homes priced $200,000 or more.
RÉNOVERT Tax Credit
The eligibility period for the RénoVert tax credit is extended until March 31, 2019 for all eligible work, with the exception of construction, renovation, modification or reconstruction of an evacuation system, the receipt or treatment of wastewater, toilet water or greywater in accordance with the requirements of the Regulation respecting the evacuation and treatment of wastewater from isolated dwellings. Note that the RénoVert refundable tax credit has been put in place temporarily to encourage individuals to carry out eco-friendly residential renovation work that is recognized and has a positive impact on energy or the environment. It is for you if you have eco-responsible residential renovation work recognized for a home owned or co-owned by you and which is either your main place of residence or your year-round cottage. you normally work. This house is one or more of the following dwellings, and its construction was completed before 1 st January 2016:
a detached house ;
a manufactured home or a mobile home permanently installed;
an apartment in a divided condominium building ( condominium );
a dwelling in a multi-unit residential building;
a year-round cottage that is normally occupied by the individual.
The recognized eco-responsible renovation work must be performed by a qualified contractor under an agreement entered into after 17 March 2016 and before 1 st April 2019. The maximum amount of the tax credit you can claim for your qualifying home for the years 2016 to 2019 is $ 10,000. It is 20% of the portion of eligible expenditures exceeding $ 2 500 and you paid after 17 March 2016 and before 1 st January 2020.
Montreal Home Ownership Program
Montreal’s Home Ownership Program applies to both new and existing properties. In respect to new properties, if it is also a first-time acquisition, a buyer is entitled to a refund of the transfer tax (also known as a ‘welcome’ tax). A lump sum of between $2,250 and $6,250 will also be awarded to future occupants, with the amount varying according to the value of the acquired property and the nature of the occupants. Example: A person living alone who buys a residence up to a maximum value of $200,000 will be entitled to an amount of $2,250. A family with at least one child under the age of 18 will be entitled to the maximum amount of $6,250, provided that the family acquires a property up to a maximum value of $360,000, with at least 1,000 square feet of interior space. The same family can also benefit from six months of free public transit with the purchase of an annual OPUS card and two Accès Montréal cards.
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