I'll be the first to admit that I had to do quite a bit of research about Canadian Homebuying rules because it's been 16 years since I was a new homebuyer!
Last week I expanded on the Mortgage Stress Test and the week prior to that I discussed how Mortgage Loan Insurance applies to First Time Homebuyers!
This week, I'm discussing a few options for Canadians to research and think about as First Time Homebuyers in Canada.
What is the,
First Time Home Buyer Initiative:
A new program which helps to make homeownership more affordable.
Will the First Time Home Buyer Incentive really help?
Critics have argued that it will do little to help homebuyers in Canada’s priciest housing markets which is where people need the incentive the most. Since it was initially capped at $480,000, it will still not be enough for those home prices in Toronto, Vancouver and Victoria because according to the REMAX Canadian Housing Market Outlook Report, this is where home prices in these cities sat in 2020, and where they’re expected to go in 2021:
Toronto $918,883 (2020, January1-October 31) $974,015 (estimated in 2021)
Vancouver $1,270,000 (2020, January1-October 31) $1,320,800 (estimated in 2021)
Victoria $778,854 (2020, January1-October 31) $817,796 (estimated in 2021)
Furthermore, media had reported that only one-third of applicants for the incentive were from Canada’s largest cities, and homebuyers don’t seem too keen on the idea of the government having a stake in their home.
(https://blog.remax.ca/demystifying-canadian-first-time-home-buyer-incentive/)
Another program to research and consider is,
Home Buyers Amount:
It offers a $5,000 non-refundable income tax credit amount on a qualifying home acquired during the year potentially providing up to to $750 in federal tax relief, not provincial tax.
(https://turbotax.intuit.ca/tips/who-can-benefit-from-the-home-buyers-tax-credit-5203)
Next is the,
The Home Buyer's Plan
This is the plan that I am most familiar with because we utilized this plan when we purchased our first home in 2005. At first, we repaid our borrowed RRSPs with only the minimum payments required as per our CRA Notice of Assessment, which was initially approximately $300/year and then eventually we just repaid our RRSP back in a lump sum of a couple thousand dollars so that we could start regaining compound interest within our RRSP investments.
(https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-31270-home-buyers-amount.html)
I was very thankful that we were able to utilize the Home Buyer's Plan because of our specific and unusual financial situation in 2005 which included some of our Financial Mistakes that you can read about. However mistakes are always great learning tools!
Another program to research is,
GST/HST New Housing Rebate:
Do any of these options or programs seem like something that you could potentially use to assist you in your journey to purchasing a home?
Now Go and Be Intentional!