The Home Buyer’s Plan (HBP) is a government program allowing home buyers to withdraw up to $25,000 from their Registered Retirement Saving Plan (RRSP) to buy or build a new home.
Before withdrawing funds, you have to enter into a written agreement specifying whether you will buy or build your new home. You also must occupy this space no later than a year after buying or building this new home.
It would be best if you were considered a first-time buyer to take advantage of this program. However, you are not a first-time home buyer if you (or your spouse) have owned a home you have occupied as your principal residence in the past five years.
Once those conditions are met, people can withdraw up to $25,000 tax-free from their RRSP for a new home. Couples, including common-law, can withdraw up to $50,000. You will not pay income tax on these amounts if these funds are repaid into an RRSP.
Existing homeowners can also use this program to purchase an accessible home or a home for a disabled dependent relative. The intended individual must qualify for the Disability Tax Credit (DTC), and this home must be more accessible or better suited to the care of this individual.
First-time buyers of new and re-sale homes are eligible for provincial and Toronto land transfer tax rebates. The maximum that first-time home buyers can receive for local land transfer tax (LTT) is $2,000; for the Toronto LTT, it is $3,725.
The provincial LTT is payable anywhere in Ontario, including Toronto. As mentioned before, the maximum that a first-time buyer can receive for the provincial LTT is $2,000. For re-sale homes, the provincial rebate only applies to first-time buyers who entered Agreements of Purchase and Sale after December 13, 2007.
Toronto LTT is payable only for properties in the City of Toronto. Therefore, the maximum a first-time home buyer can receive is $3,725. The Toronto LTT rebates are in addition to any provincial LTT rebate the buyer qualifies for.
The buyer is considered a first-time buyer for the provincial and Toronto LTT if they are at least 18 years of age and must not have previously owned a home anywhere in the world. In addition, if a spouse is involved, they cannot have held a home or had any ownership interest in a home while they were the purchaser’s spouse.
The HST New Housing Rebate program allows you to claim a rebate on the part of the HST you pay on the purchase price of either a newly constructed home or the cost of building the house. For example, you can claim a rebate on a newly renovated home, a new mobile home purchase, or when your home is destroyed in a fire and subsequently rebuilt.
The purchase price of resale homes is exempted from the HST, whereas the purchase price of newly constructed homes is subject to HST.
New home buyers can apply for a 36% rebate on the federal portion of the HST of the purchase price to a maximum of $6,300 for homes costing $350,000 or less. The rebate will be reduced proportionately for new homes priced from $350,000 to $450,000, Homes over $450,000 will not receive a rebate on the federal portion of the HST.
For the provincial portion of the HST, new home buyers can apply for a 75% rebate applicable to the purchase price to a maximum of $24,000.
