Buying your first home is one of the most substantial investments you will make. With the recent revamp of Canada’s mortgage stress test, buying a home has become more accessible as a first-time homebuyer. Launched on September 2, 2019, the First-Time Home Buyers incentive program will help assist individuals in purchasing their first home. 

The plan, instituted by the Canadian Government, will help reduce the risks and costs of a mortgage for first-time buyers. The program is expected to benefit 100,000 families over the next three years. One of the biggest perks of the program will drop mortgage rates by nearly $300 a month and as much as $3,400 annually. In turn, the Government will become an equal partner for as much as 10% of a $500,000 home.

The Government has also put other programs and tax credits in place to help with the purchase of your first home. 

Home Buyers’ Plan

Homebuyers have the opportunity to withdraw up to $35,000 in a calendar year from their registered retirement savings plans to help offset the cost of purchasing or building a home. Budget 2019 proposed the increase in the Home Buyers’ Plan withdrawal limit and went into effect after March 19, 2019. To qualify for the program, homebuyers must meet both the HBP eligibility and the RRSP withdrawal conditions. 

To be eligible to withdraw funds, home buyers are required to fill out Area 1 of form T1036 and pass it onto the RRSP issuer who fills out Area 2. Once approved, buyers can withdraw a single amount or make multiple withdrawals throughout the same calendar year. Once the second calendar year hits, the repayment period starts. Buyers have up to 15 years to pay back the withdrawn amount to their RRSP.

First-Time Buyers’ Tax Credit

The first-time buyers’ tax credit helps homebuyers with the costs associated with the purchase of the home, including the legal fees, disbursements, and land transfer taxes. Introduced in 2009, the tax credit represents a $5,000 non-refundable income tax credit on a qualifying home. 

If you are in the market for your first home or have questions about the benefits put in place by the Government for first-time buyers, contact Mehran Redjvani or visit www.redrealtor.ca