There has been a blizzard of housing announcements coming from all levels of government in this past year. Many of these apply to first-time home buyers. Below is a summary of current policies & programs aimed at helping first-time homebuyers achieve home ownership.
PROPERTY TRANSFER TAX EXEMPTION ON NEWLY-BUILT HOMES:
The BC government charges a property transfer tax (PTT) on all property sales of between 1-3% depending on purchase price. However, all purchasers of newly constructed homes under $1.1 million who use the property as their primary residence can receive a full exemption of the PTT.
FIRST HOME SAVINGS ACCOUNT (FHSA):
The FHSA is a registered savings account that allows individuals to save and invest up to $40,000 tax-free toward their first home. Upon opening an account, the individual accrues $8,000 in contribution room each year for five years. All contributions are tax deductible and all investment income is tax-free. Additionally, the contribution limit applies to each individual in a couple who jointly buy their first home, bringing the combined amount to $80,000.
HOME BUYERS’ PLAN:
Individuals with savings in a registered retirement savings plan (RRSP) can withdraw up to $60,000 toward the purchase of their first home. Buyers are required to make annual contributions to their RRSP to repay the amount withdrawn and have up to 15 years to repay the total amount. There is a five-year grace period available on repayment, which would leave buyers with 10 years to repay their RRSP if the full grace period is used. The withdrawal limit applies to each individual in a couple who jointly buy their first home, bringing the combined withdrawal amount to $120,000.
FIRST-TIME HOME BUYERS’ TAX CREDIT (HBTC):
Buyers can claim the non-refundable tax credit to earn up to a $1,500 return on their federal tax bill . The tax credit can be split between couples who jointly buy a home, but the combined total cannot exceed $1,500.
30-YEAR AMORTIZATION PERIODS:
First-time homebuyers can extend the amortization period on their mortgage to 30 years when they secure an insured mortgage to purchase a newly constructed home . Note that insured mortgages are only available on home purchases up to $1 million and allow buyers to save a smaller downpayment – 5% down on homes up to $500,000 and 10% down on the portion of the home price between $500,000 and $1 million.
GST NEW HOUSING REBATE ON NEW HOME PURCHASES:
First-time homebuyers can apply for a GST rebate on the purchase of newly constructed homes equivalent to 36% of the GST amount on homes under $350,000. For homes between $350,000 and $450,000, the GST rebate amount declines on a sliding scale.
A pre-sale purchase is an excellent way for First Time home buyers to enter the market. Many offer low deposit options and longer completion dates, giving First Time home buyers time to save and plan for their transition to home ownership.
Joanne Hoekstra is a Real Estate Advisor with rennie & associates realty and can help you find a pre-sale home that fits your needs! Joanne enjoys helping buyers find their perfect community and working with new and experienced investors in building their real estate portfolios. She has successfully sold out six pre-sale projects which included detached homes, duplexes, townhomes and condominiums. As a listing expert, Joanne ensures the best customer service for her clients from listing through to completion of the sale and applies her marketing and sales expertise to each home. Joanne can be reached at 604-722-6645 or jhoekstra@rennie.com or follow Joanne on Facebook at www.facebook.com/jhoekstra.rennie.
PROPERTY TRANSFER TAX EXEMPTION ON NEWLY-BUILT HOMES:
The BC government charges a property transfer tax (PTT) on all property sales of between 1-3% depending on purchase price. However, all purchasers of newly constructed homes under $1.1 million who use the property as their primary residence can receive a full exemption of the PTT.
FIRST HOME SAVINGS ACCOUNT (FHSA):
The FHSA is a registered savings account that allows individuals to save and invest up to $40,000 tax-free toward their first home. Upon opening an account, the individual accrues $8,000 in contribution room each year for five years. All contributions are tax deductible and all investment income is tax-free. Additionally, the contribution limit applies to each individual in a couple who jointly buy their first home, bringing the combined amount to $80,000.
HOME BUYERS’ PLAN:
Individuals with savings in a registered retirement savings plan (RRSP) can withdraw up to $60,000 toward the purchase of their first home. Buyers are required to make annual contributions to their RRSP to repay the amount withdrawn and have up to 15 years to repay the total amount. There is a five-year grace period available on repayment, which would leave buyers with 10 years to repay their RRSP if the full grace period is used. The withdrawal limit applies to each individual in a couple who jointly buy their first home, bringing the combined withdrawal amount to $120,000.
FIRST-TIME HOME BUYERS’ TAX CREDIT (HBTC):
Buyers can claim the non-refundable tax credit to earn up to a $1,500 return on their federal tax bill . The tax credit can be split between couples who jointly buy a home, but the combined total cannot exceed $1,500.
30-YEAR AMORTIZATION PERIODS:
First-time homebuyers can extend the amortization period on their mortgage to 30 years when they secure an insured mortgage to purchase a newly constructed home . Note that insured mortgages are only available on home purchases up to $1 million and allow buyers to save a smaller downpayment – 5% down on homes up to $500,000 and 10% down on the portion of the home price between $500,000 and $1 million.
GST NEW HOUSING REBATE ON NEW HOME PURCHASES:
First-time homebuyers can apply for a GST rebate on the purchase of newly constructed homes equivalent to 36% of the GST amount on homes under $350,000. For homes between $350,000 and $450,000, the GST rebate amount declines on a sliding scale.
A pre-sale purchase is an excellent way for First Time home buyers to enter the market. Many offer low deposit options and longer completion dates, giving First Time home buyers time to save and plan for their transition to home ownership.
Joanne Hoekstra is a Real Estate Advisor with rennie & associates realty and can help you find a pre-sale home that fits your needs! Joanne enjoys helping buyers find their perfect community and working with new and experienced investors in building their real estate portfolios. She has successfully sold out six pre-sale projects which included detached homes, duplexes, townhomes and condominiums. As a listing expert, Joanne ensures the best customer service for her clients from listing through to completion of the sale and applies her marketing and sales expertise to each home. Joanne can be reached at 604-722-6645 or jhoekstra@rennie.com or follow Joanne on Facebook at www.facebook.com/jhoekstra.rennie.
