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First-Time Homebuyer? These Rebates, Credits Can Save You Money | HuffPost Canada

First-Time Homebuyer? These Rebates, Credits Can Save You Money | HuffPost Canada

Canadians can save thousands of dollars with government programs.

 

Purchasing a house in Canada is tricky at the best of times, but getting into the property market for the first time is especially tough. To help with some of the costs of buying your initial home, there exists a range of programs for eligible first-time homebuyers. It’s a good idea to learn about these programs to avoid leaving money on the table.

These are the five biggest first-time homebuyer programs in Canada. Some aren’t available in every province, so we’ve noted where that’s the case.

1. Land transfer tax rebates

One of the largest closing costs when purchasing a home is the land transfer tax, which is charged in every province except Alberta and Saskatchewan. The City of Toronto also charges a land transfer tax on top of the Ontario tax. Land transfer tax rates are generally between 0.5 and 3.0 per cent of the home purchase price.

To help manage the cost of land transfer tax, Ontario, British Columbia, Prince Edward Island, and the City of Toronto offer rebates for first-time homebuyers. These programs reimburse some, or all, of your land transfer taxes. Each location has a maximum rebate, listed below:

  • City of Toronto: $4,475
  • Ontario: $4,000
  • British Columbia: $8,000
  • Prince Edward Island: $2,000

If you’re buying the home with someone who is not a first-time homebuyer, this may prevent you from qualifying for some, or all, of the rebate. Different eligibility rules apply for each location. Some governments require that you’ve lived in the province for a certain amount of time to claim the rebate. Others require that your home’s property value be less than a certain amount. Check your government’s website for exact qualification requirements in your location.

2. The Home Buyers’ Tax Credit

The Home Buyers’ Tax Credit (also referred to as The Home Buyer’s Amount) lets first-time homebuyers claim $5,000 of a property purchase on their tax return. With current tax rates, that results in a $750 rebate.

You’ll need to claim this credit on your tax return in the year you buy the property. You can split the credit between two returns for joint purchases, but the overall claim can’t exceed $5,000.

3. GST/HST New Housing Rebate

When you purchase a newly built house, construct a new house, or make substantial renovations to your existing home, you’ll be charged GST or HST. The GST/HST New Housing Rebate reimburses a portion of this.

This rebate isn’t exclusive to first-time homebuyers, but many first-time buyers use it when purchasing a new home. Eligibility and rebate amounts depend on the province your home is located in. You can claim the rebate within two years of buying your new house, or from when construction was completed.

4. The Home Buyers’ Plan

The Home Buyers’ Plan (HBP) is not a credit. Instead, it’s a way for you to increase your down payment with money from a Registered Retirement Savings Plan (RRSP), thus increasing how much mortgage you can afford.

First-time homebuyers can withdraw up to $35,000 from an RRSP, but it’ll need to be repaid (on a non-deductible basis) within 15 years to avoid a penalty. Any amount withdrawn needs to have been in the RRSP for at least 90 days - if not, those contributions may not be tax-deductible.

It’s important to consider the long-term financial implications of this program. While borrowing from your RRSP can increase what you can afford today, you may sacrifice outsized returns that could have come from maintaining your RRSP.

5. The First Time Home Buyer Incentive

This program is also not a rebate. Rather, the First-Time Home Buyer Incentive is a shared-equity mortgage with the Canadian government. With this program, the government takes a 5 to 10 per cent stake in your home, with you retaining exclusive access.

This lets you buy a home with a smaller deposit and lowers your monthly mortgage payments. The government contribution needs to be repaid within 25 years, based on the home’s market price at the time the incentive is paid back. This means that if your home’s value goes up, then the government also benefits from the increase. The same is true should your home’s value decrease. If the home is sold before the contribution is repaid, the government receives its applicable share from the sale.

This program is interesting, but it doesn’t suit everyone. Firstly, not all homebuyers will want a shared-equity mortgage. Secondly, the incentive has some very specific eligibility criteria, which limit the types of buyers the incentive is useful for.

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Consumer debt: 10 Tips for Getting out of It

Consumer debt: 10 Tips for Getting out of It

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Whee! Debt-free!

You might be trying to get so creative that you’ve forgotten about some really basic ways to get/become consumer debt-free; or, maybe you’re stuck in a rut with just a few ideas, and you can’t seem to get the creative juices flowing.

With that in mind, here's 10 great tips for getting out of debt.

  1. Learn the word “no”: Avoid the temptation of the buy now-pay later mentality that we are bombarded with every day in ads and TV commercials. Develop the mental strength to only buy what you really need and adopt the do-whatever-it-takes mindset.
  2. Pay cash instead of using credit cards: You’ll never get out of debt until you stop making consumer debt a way of life.
  3. Start following a budget or spending plan: It’s worth the time, and you can save a ton once you see where you are wasting your money.
  4. Get a part-time job: One of our clients made nearly $20,000 a year delivering pizzas. No excuses!
  5. Use Kijiji or Craigslist: Sell your stuff. Or, better yet, if you have a skill for making something, put that skill to use by making stuff and selling it online.
  6. Stop eating out: If you don’t know where all your money is going each month, we’re pretty sure Boston Pizza can locate it for you.
  7. Cut cable: Welcome to 2017, where you can watch most of your favorite shows online. Put that $80-per-month cable bill toward your consumer debt.
  8. Visit the library: Remember libraries? They have free books you can borrow! Free is a lot cheaper than Amazon.
  9. Avoid expensive hobbies: $200 a month on golf and you don’t even have an RSP or an education fund for your children?  
  10. Use the Debt Snowball Method. Focus all your energy on paying off one debt at a time. Google 'Debt Snowball' for more info! Having a system to follow can make all the difference.

The bottom line is that you’ve got to get serious about getting out of consumer debt - if you really want to do it.

Don’t let next year come around with you still up to your eyeballs in debt because interest rates are set to rise this year. When they do, it’s going to set a lot of other things in motion. And put a lot more pressure on anyone with consumer debt.

Not sure you can tackle your debt yourself? I get that. Personal debt, consumer debt, household debt; whatever it is, the pay-down challenge can be intimidating. Allow me to help you. My Debt Eliminator course is an organized way to pay down your debt without ruining your credit rating. Check it out the Debt Eliminator program.