First Time Buyer Programs

First Time Buyer Programs - Government Programs to reduce the cost of buying your first home.

Both the government of Canada and the Ontario government have established programs to assist first time home buyers.

The Federal Program is the RRSP Home Buyer's Plan (HBP) and the Province of Ontario has instituted the Land Transfer Tax rebate.What is the HBP?

Even if you do not have an RRSP, as a first time buyer you may qualify to use this program as you will see later in this article.

The HBP is a program that allows you to withdraw up to $20,000 from your registered retirement savings plans (RRSPs) to buy or build a qualifying home without having to pay tax on the withdrawal as you would normally have to do.

You do not have to include eligible withdrawals in your income, and your RRSP issuer will not withhold tax on these amounts. You can withdraw a single amount or make a series of withdrawals throughout the same year, provided the total of your withdrawals is not more than $20,000. If you buy the qualifying home with your spouse or common-law partner, or with other individuals, each of you can withdraw up to $20,000.Generally, you have to repay all withdrawals to your RRSPs within a period of no more than 15 years. You will have to repay an amount to your RRSPs each year until your HBP balance is zero. If you do not repay the amount due for a year, it will have to be included in your income for that year.

Some First Time Buyer Conditions

To withdraw funds from your RRSPs under the HBP, when you are buying or building a qualifying home for yourself or a related disabled person, you must first have entered into a written agreement to buy or build a qualifying home. Obtaining a pre-approved mortgage does not satisfy this condition.You have to intend to occupy the qualifying home as your principal place of residence.When you withdraw funds from your RRSPs under the HBP, you have to intend to occupy the qualifying home as your principal place of residence no later than one year after buying or building it. Once you occupy the home, there is no minimum period of time in which you have to live there.Generally, before you can withdraw funds from your RRSPs to buy or build a qualifying home, you have to meet the first-time home buyer’s condition.

You are not considered a first-time home buyer if, at any time during the period beginning January 1 of the fourth year before the year of the withdrawal and ending 31 days before your withdrawal, you or your spouse or common-law partner owned a home that you occupied as your principal place of residence.If at the time of the withdrawal you have a spouse or common-law partner, it is possible that only one of you will be considered a first-time home buyer.What if you don't have an RRSP?

You may still be eligible for the Home Buyers Plan (HBP). If you are been working and had income in the last few years, you are entitled to contribute to an RRSP.

In fact you can contribute to HBP by contributing to an RRSP retroactively based on previous years earnings. You can check what your eligible retroactive contributions are by checking your Notices of Assessment that you received from Revenue Canada.Some people take out a short-term RRSP loan and pay it back by cashing in your RRSP and using the tax refund for a condo down payment. Speak to your banker about this option as they are usually quite amenable to this type of loan.

FIRST TIME BUYERS OF NEWLY BUILT HOMES

Land Transfer Tax Refund

If you are buying a new condo or home as a first time buyer the Ontario government will refund the land transfer tax otherwise payable to a maximum of $2,000.

The requirements are as follows:

The purchaser must be at least 18 years old

Application for refund must be made within 18 months after the date of conveyance or disposition

The purchaser must occupy the home as his or her principle residence within 9 months of the date of conveyance or disposition

The purchaser cannot have previously owned a home, or an interest in a home anywhere in the world

A spouse or same-sex partner of the purchaser cannot have owned a home, or an interest in a home, anywhere while the spouse or same-sex partner of the first time purchaser The purchaser cannot have received an Ontario Home Ownership Savings Plan (OHOSP) based refund of land transfer tax.

The interest rate of mobile home loan depends on the credit score of the applicant and the type of home purchased. Also as these types of loans are not like conventional mortgages, so the interest paid is not tax-deductible. To learn more on mobile home loan visit mortgagefit.com.