With the housing markets in Canada soaring to new heights, it can seem hard to get your foot in the door of a home as a first-time home buyer. But it’s comforting to know that all homeowners today were once in your shoes.
They may have even used some of the programs, rebates, and negotiating strategies I’m about to share with you. It’s beneficial to learn what programs are available in your province and which ones are right for your unique situation. The more programs you can take advantage of, the more money you’ll get back in your pocket.
Here are a few of the top rebates, credits, and strategies you should consider when buying a home.
First-time Home Buyer Tax Credit
A maximum of $750.00 can be claimed on your tax return within 1 year of purchase.
- The home must be in Canada
- The dwelling must be a single, semi, townhouse, mobile home, condo, or apartment
- You must intend to live in the home within the first year of purchase
- The title of the home must be in yours or your partner’s name as a first-time home buyer
- You haven’t owned a home in the last 4 years
- You didn’t live in a home owned by your partner within the last 4 years
- You must have documents to prove you purchased the home
Home Buyers Plan (HBP)
As a first time home buyer in Canada, you can use up to $35,000.00 from your RRSPs toward a tax-free down payment. If your partner also qualifies as a first time home buyer, you can each use a maximum of $35,000.00 from your RRSPs, totalling $70,000.00.
The only hitch—you must pay it all back within 15 years.
After 2 years and 60 days of taking out the loan, your first repayment toward the RRSP will be due. Your payment will be divided equally over the remaining years. If you can pay more than the minimum, your remaining payments will drop accordingly.
Land Transfer Tax Refund
First-time homebuyers can also take advantage of the land transfer tax credit.
- Must be a Canadian citizen or permanent resident
- Must be at least 18 years old
- Must be a first-time home buyer
- You must make your application within 18 months of the purchase date
- The maximum rebate is $4,000.00
- The tax credit will be calculated using a maximum value of $368,333.00
- The buyer must live in the home within 9 months of purchase
- If your spouse has owned a home during your relationship, you will only receive 50% of the eligible credit
This rebate isn’t just for first-time home buyers.
- Any newly built home
- Any home that’s been considerably renovated
- Any home rebuilt from fire damage
- The GST/HST amount varies with the purchase price of the home, or the cost of renovations
- The maximum claimable amount is $450,000.00
Home Buyers Disability Tax Credit
In Canada, if you have a disability and you’ve claimed it on your tax return, you may qualify for the home buyers disability tax credit.
- The home has to be suited for and meet the needs of the disability
- The disabled person must live in the home within 1 year of the purchase date
Best Mortgage Terms
Investing your time and energy into finding the best mortgage rates available will save you money right down to the bottom line. Working with someone knowledgeable in this area would be a great asset—even a few decimals less on the interest rate will give you significant savings.
- Moving company expenses
- Hotel fees
- Legal fees
When you put in an offer to purchase a home, be sure to use any repairs or flaws found by your home inspector as negotiating items. You can negotiate to have the price of the home lowered, or to have the issues taken care of by the current owner prior to your possession.
- Foundations repairs
- Roof repairs/re-shingle
- Old leaky windows
- Structural damage
Home Office Tax Credits
If you run a business from home, or even just work from home, there are several things you can claim on your tax return like any supplies, equipment, or furniture purchased specifically for your home office.
- House taxes
- Cell phone
- House alarm
- Cleaning supplies
A Good ‘ol Savings Account
It’s difficult to set aside money specifically for savings these days. The cost of living is always on the rise—and your wage remains stagnant.
- Have a separate account designated for savings so you can see your money grow
- Set up automatic deposits so you have a recurring amount going directly into savings
- Depending on what you’re saving for and how long you’ll need to save to get there, you could invest in a GIC. There are GIC’s available with terms between 1-5 years
- There are also tax-free savings accounts (TFSA). You won’t have to pay capital gains tax on the allowable annual limit
- Get into a habit of saving unspent budgeted money. For example, if you have a budget of $100.00 per week for groceries and you only spent $80.00, drop that extra $20.00 into your savings account. Slowly but surely, that extra money will add up
If you’re already thinking that you don’t have money available to set aside, it’s time to write out a budget. List all your expenses, and look for non-essential costs that you can cut so you can put that money into savings instead.
The Bottom Line: Explore All of Your Options
These programs and incentives are in place to make it easier for people in Canada to purchase a home.
Whether you’re saving for the down payment of a house, looking to get money back after purchasing, or just looking for ways to make owning your home more economical, these saving strategies will get you there.
You want an affordable and seamless experience. And I want to help. If you’re looking for someone experienced with all the credits, grants, rebates, and strategies currently available, get in touch with me today.
Hi, I’m Joel, a real estate professional based in Toronto.
My approach is simple—I put you first. I believe in open communication, total transparency, and meaningful results. I’ll guide you through the real estate process, market values, and always keep the focus on you—and your needs.