Despite any age, buying a house of your own is always considered as a boss move but it’s also challenging and intricate if you are a first-time buyer. After all, there are so many steps, tasks, and requirements involved that you may get anxious thinking you are making an expensive mistake
Many times when you seek for suggestions, you end up flustered by others’ advice so it’s always better to reach out to experts who are consistently doing best in this business and helping many emptor to strike the best deal in their budget.
Here are a few telltales about home buying for you to explore that only real estate agents are aware of.
First-time homebuyers actually enjoy some special programs created to encourage new entrants into the real estate market. To demystify the process so you get the most out of your purchase, here is a rundown of what you need to consider before you buy and what you can expect from the buying process itself, plus tips to make life easier after you buy your first home.
First-Time Home Buyers Tax Credit– Introduced in 2009 federal budget, allows first time home buyers in Canada the opportunity to recover some of the costs associated with their purchase. It helps offset legal fees, inspections, and other similar closing costs. The First-time Home Buyer’s Tax Credit is a non-refundable credit and is valued at $750.
RRSP Home Buyers’ Plan- One brilliant source of funding for your mortgage down payment is a Registered Retirement Savings Plan (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, note it’s tax-free.
If you’re purchasing with someone who is also a first time home buyer, you can both access $25,000 from your RRSP for a combined total of $50,000. However, since the HBP is considered a loan, it must be repaid within 15 years.
Criteria to meet to get this benefit:
- RRSP funds you borrow must be in your account for at least 90 days prior to withdrawal.
- You cannot have owned a home within the previous four years.
- If you’re buying with a spouse (or common-law partner) who is not a first-time Homebuyer, you cannot have lived in a house they owned for 4 years.
- You have entered into a written agreement to buy or build a qualifying home.
- You must intend to live in the home within one year of purchase as your primary residence.
- If you have used the Home Buyers’ Plan before, you cannot have any outstanding balance due.
- You must make the withdrawal from your RRSP within 30 days of taking the title of the home
- You must be a Canadian resident.
If you make a withdrawal from your RRSP but do not meet the first-time homebuyer eligibility requirements, this withdrawal will be taxed and you must include it in your income tax statement as taxable income.
Land Transfer Tax Rebate- First-time homebuyers who live in the City of Toronto can qualify for a rebate equal to the full amount of their municipal land transfer tax, up to a maximum of $4,475. This rebate applies whether you’re buying a Toronto Townhouse, house or condo.
To qualify for the Toronto Municipal Land Transfer Tax Rebate for First-Time Purchasers, you must meet the following criteria:
- You must be a Canadian citizen or permanent resident of Canada,
- You must be 18 years of age,
- You must live in the home within 9 months of purchasing it,
- You cannot have owned a home before, and
- If you have a spouse, they cannot have owned a home during the time they have been your spouse.
Based on the Toronto land transfer tax rates, the rebate will cover the full tax amount up to a maximum home purchase price of $400,000. For homes with purchase prices over $400,000, homebuyers will qualify for the maximum rebate, but will still owe the remainder of their land transfer tax. If you are buying your home with your spouse, but only one of you qualifies for this rebate, you can still receive 50% of the rebate.
GST/HST New Housing Rebate- The GST/HST New Housing Rebate offers money back to Canadians who buy a newly built home, substantially renovate an existing home, or rebuild a home that was destroyed due to fire. In all three cases, an individual will incur GST/HST on their purchase. The GST portion of a new home purchase or renovation can be rebated to all Canadians who qualify.
All these financial details might be overwhelming for a first-time homebuyer. That is why you need an experienced real estate agent who can guide you through the process.
For over 14 years we at SkillRealty have elevated the home buying and selling experience for our clients with our innovative strategies. We also guide our clients about the down payments, CMHC Insurance (mortgage default insurance), type of houses that suit them, features and other amenities client required to be in their ideal home, mortgage they’ve qualified for, and much more.
A good real estate agent’s expertise can protect you from any pitfalls you might encounter during the process and we’re known for our good deeds in this business and guiding people to find their delightful abode since 2004.
