Canadian Home Buyer Programs Worth Taking Advantage of Today

11 April 2018
Joshua Chisvin

Whether you’re in the market to purchase your very first home or this isn’t your first time around the block, you’d be wise to take advantage of these Government of Canada programs. They were created to support home buyers and could help you save some hard-earned money along the way.

THE FIRST-TIME HOME BUYERS’ TAX CREDIT

Since 2009, this program has been a non-refundable tax credit, based on an amount of $5,000, for certain home buyers that acquire a qualifying home. The credit is calculated by multiplying the lowest personal income tax rate for the year by $5,000.

You will qualify for the First-Time Home Buyers’ Tax Credit if you, your spouse or common-law partner acquired a qualifying home, or you did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years.

Conversely, if you are a person with a disability or are buying a house for a related person with a disability, you do not have to be a first-time home buyer. However, the home must be acquired to enable the person with the disability to live in a more accessible dwelling or in an environment better suited to the personal needs and care of that person.

As for what constitutes a qualifying home, eligibility refers to housing units located in Canada, which were acquired after January 27, 2009. They include existing homes and those being constructed, single-family homes, semi-detached homes, townhouses, mobile homes, condominium units and apartments in duplexes, triplexes, fourplexes, as well as apartment buildings themselves.

Additionally, a share in a co-operative housing corporation that entitles you to possess, and gives you an equity interest in, a housing unit located in Canada also qualifies.

That said, a share that only provides you with a right to tenancy in the housing unit does not qualify.

Also, you must intend to occupy the home — or you must intend that the related person with a disability occupy the home — as a principal place of residence no later than one year after it is acquired, and your interest in the home must be registered in accordance with the land registration system applicable to where it is located.

One more thing: to claim this First-Time Home Buyers’ Tax Credit, check out line 369 incorporated into Schedule 1 (Federal Tax) on your personal income tax return. It will allow you to claim the credit in the year in which you acquired the qualifying home.

No, you don’t have to submit any supporting documents with it, but you must ensure this information is available, should it be requested by the Canada Revenue Agency.

For more information, I encourage you to head to the CRA’s website, where all new forms, policies and guidelines are posted as soon as they become available.

THE HOME BUYERS’ PLAN

The Home Buyers' Plan is a program that allows you to withdraw up to $25,000 in a calendar year from your registered retirement savings plans (RRSPs) to buy, or build, a qualifying home for yourself or for a related person with a disability.

To participate in the program, you must meet both the Home Buyers' Plan eligibility and RRSP withdrawal conditions.

Now, as far as eligibility goes, you must be considered a first-time home buyer, and you must have a written agreement to buy or build a qualifying home for yourself.

Otherwise, you must have a written agreement to buy or build a qualifying home for a related person with a disability, or to help a related person with a disability buy or build a qualifying home. To be certain, obtaining a pre-approved mortgage does not satisfy this condition.

Furthermore, you must intend to occupy in the qualifying home as your principal place of residence within one year after buying or building it. Or, 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 for that person to occupy the qualifying home as his or her principal place of residence.

And in regards to meeting the RRSP withdrawal conditions:

- You have to be a resident of Canada at the time of the withdrawal.

- You have to receive or be considered to have received, all withdrawals in the same calendar year.

- You cannot withdraw more than $25,000.

- Only the person who is entitled to receive payments from the RRSP can withdraw funds from an RRSP. You can withdraw funds from more than one RRSP as long as you are the owner of each RRSP. Your RRSP issuer will not withhold tax on withdraw amounts of $25,000 or less.

- Normally, you will not be allowed to withdraw funds from a locked-in RRSP or a group RRSP.

- Your RRSP contributions must stay in the RRSP for at least 90 days before you can withdraw them under the HBP. If this is not the case, the contributions may not be deductible for any year.

- Neither you nor your spouse or common-law partner or the related person with a disability that you buy or build the qualifying home for can own the qualifying home more than 30 days before the withdrawal is made.

- You have 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 before October 1st of the year after the year of the withdrawal.

- You have to fill out Form T1036, Home Buyers' Plan Request to Withdraw Funds from an RRSP for each eligible withdrawal.

In case you were wondering, the aforementioned First-Time Home Buyers’ Tax Credit is NOT connected to this Home Buyers’ Plan. Although some of the eligibility conditions are similar, the two are separate. Your eligibility for the former will not change whether or not you also participate in the latter.

Again, for more details, I suggest you visit the CRA’s website.

THE GST/HST NEW HOUSING REBATE

Finally, you may qualify for a rebate of part of the GST or HST that you paid on the purchase price or cost of building your new house, on the cost of substantially renovating or building a major addition onto your existing house, or on converting a non-residential property into a house.

This GST/HST New Housing Rebate stuff gets pretty deep — and, frankly, complicated — which means we’re going to cover it on its own sometime soon. Plus, I don’t want to overload you with too much information here.

Just be aware it exists, and applies to both owner-built houses and houses purchased from a builder, as well as varies across applicable provinces like Ontario, British Columbia and Nova Scotia.

In the meantime, you guessed it: head to CRA’s website for more!

  Real Estate