First time homebuyers in Ontario are in the best position to buy a home today. Mortgage rates are the still close to the lowest they have ever been in. In addition to that both the Federal and Provincial Governments have programs in place to make it that much easier to buy a new home.
Home ownership is a concern for the Canadian Government and 60 years ago CMHC (Canada Mortgage and Housing Corporation) was created. Their goal, in their own words is; “We are committed to helping Canadians access a wide choice of quality, affordable homes...” As one of the two major mortgage insurers in Canada CMHC makes it possible to purchase a home with as little as 5% down. With the help of some lenders it is STILL possible to get 100% financing.
In order to get Canadians into their first home there are many incentives such as the First Time Home Buyers Program. This program allows people to use their RRSP savings for a down payment of up to $25,000 ($50,000 for couples) without being taxed. After a two-year grace period, you must repay one fifteenth of the amount used each year. This means on $25,000 you must place $1,667 into your RRSP each year or it becomes taxable income.
So far we have seen how home ownership has been made easier but it doesn’t end there. There are programs in place to refund some of the costs involved in purchasing a home as well. In order to cash in on these incentives, you have to know all about them. The First-Time Home Buyers Tax Credit means that for an eligible home a nonrefundable tax credit can be applied for based on an amount of $5,000 and worth up to $750 for 2011. More info and how to collect can be found here;
The Land transfer tax can be a nasty surprise for most first time buyers because it’s not something that comes to mind when thinking of buying a home. The provinces that currently collect land transfer taxes are: British Columbia, Manitoba, Ontario, Quebec, and Nova Scotia. Every home purchase in those provinces will be taxed by the government using slightly different calculations. There is however incentives that will help with this unforeseen cost. In Ontario the Ontario Land Transfer Tax Refund could mean up to $2000 can be refunded at time of registration. British Columbia has a program that could find you exempt from paying the land transfer tax altogether. Search for ‘land transfer tax refund’ or ‘program’ for your province to see what your government programs might be.
HST has received a lot of negative press with association to the home buyers market. There were fears that the HST would kill the market and mean huge costs for consumers looking to buy a home. The Ministry of Revenue website claims that ‘93% of all homes sold in Ontario, on average, are not subject to an additional tax amount under the HST.’ A statement that at first sounds incorrect but here is why it’s true. Resale homes are not subject to the HST, this takes out the majority of sold homes on the market. Of the new construction homes that are purchased buyers receive up to $24,000 in rebates regardless of the price of the new home insuring that buyers of homes priced up to $400,000 pay, on average, no more - or possibly less - tax than under the old PST system. Even new rental housing, including investment properties, receive a similar rebate.
As you can see getting your first home has become easier and more affordable. So if you are still renting or just holding off on your first purchase the question is why? Make the move to own a home of your own and get help doing it from the government!
Centum One Financial Group Inc.
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