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With property prices and mortgage rates skyrocketing and so many expenses being tied to buying a home, becoming a homeowner can seem like an unattainable dream for a lot of future buyers. Fortunately, there are many programs and grants available to help you make your real estate project a reality.
The Home Buyers’ Plan (HBP) is a program that allows you to withdraw up to $35,000 per person ($70,000 for couples) from registered retirement savings plans (RRSPs) to buy or build a qualifying home without penalty. This amount can then be used as you see fit, such as for a down payment or for other expenses, whether or not they’re related to the acquisition.
However, you have to repay the full amount over 15 years, starting the second year after the withdrawal. To avoid being taxed, you must make an annual repayment equivalent to at least 1/15th of the amount
The HBP is primarily for first-time buyers, but individuals who have not lived in a home that either they or their partner owns in the last four years may be eligible as well. You have to intend that the home you buy will be either your residence or that of a relative with a disability. It must also be in Canada; it’s not
possible to use the HBP to buy property outside the country.
As of 2020, people who are separated or divorced who have already been homeowners can also take part in the HBP under certain conditions, even if they have recently benefited from the program.
The FHSA was recently created to help first-time buyers access homeownership in a difficult real estate
environment. While we don’t yet know everything about this new tool, we do know that it combines some of the benefits of the registered retirement savings plan (RRSP), the Home Buyers’ Plan (HBP), and the tax-free savings account (TFSA), making it tax-efficient.
As of January 1, 2023, all eligible Canadians will be able to deposit up to $8,000 per year, up to a lifetime
maximum of $40,000 per person. Unlike with RRSPs and TFSAs, however, you won’t be able to accumulate your unused annual contribution room and carry it over to the next year.
The amount you contribute, along with any income earned, must then be used within 15 years of opening the account to make a down payment on a first home.
Otherwise, you can transfer the money to an RRSP or registered retirement income fund (RRIF) and it will be taxed at the marginal tax rate at the time of withdrawal. Amounts withdrawn for other purposes will be taxed.
Canadians aged 18 and older who have not lived in a property they own in the year they open the account or in the four years prior to that will be eligible to open an FHSA.
Offered by the Canada Mortgage and Housing Corporation (CMHC), the FTHBI allows eligible homebuyers to make a larger down payment in order to reduce their mortgage. Under the program, CMHC can lend future homeowners 5% of the purchase price of an existing home or a manufactured or mobile home, or 10% of the purchase price of a newly constructed home.
However, this amount must be repaid based on the value of the property when it’s sold, or no later than
25 years after the purchase. For example, if you buy a newly constructed home and receive a loan of 10% of its value at the time of purchase, you’ll have to repay 10% of the home’s value when you sell it.
This program is for first-time buyers, but not exclusively. You may also be eligible if you have not occupied a property owned by you or your partner in the last four years.
To qualify for this incentive, your income must not exceed $120,000, and the total amount you borrow to
buy the property must not be more than four times your qualifying income.
Furthermore, the minimum down payment must come from traditional funds such as an RRSP, a TFSA, or a non-repayable gift from an immediate family member. Lastly, as with most existing programs, you must intend to occupy the property.
The federal and provincial governments have put tax credits in place to help first-time home buyers.
Introduced in 2009, this federal tax credit was increased in the 2022 budget from $5,000 to $10,000. Since this credit is calculated based on the lowest tax rate of 15%, eligible buyers will now receive $1,500 instead of $750.
Due to the 16.5% federal tax abatement for Quebec residents, future homeowners in the province may be entitled to a credit of $1,252.
To align with the 2022 federal budget, the Quebec government recently announced that it too would be
increasing this tax credit. As a result, buyers will be able to receive a tax break of up to $1,500.
In the case of a joint purchase, this amount will be divided between the future owners.
Quebec homeowners may receive a GST and QST rebate after purchasing a new home.
As with most programs and grants, you must not have lived in a property owned by you or your partner
during the year or in the last four years. You also have to use the new property as your principal residence to get this rebate.
With this program, CMHC aims to encourage future homeowners to purchase an energy-efficient home by offering them a 25% partial refund of the mortgage loan insurance premium.
To be eligible for this refund, your home must have an energy efficiency certification that meets the
criteria of Natural Resources Canada’s EnerGuide rating system, or meet energy efficiency or greenhouse gas targets.
This program is available to all homeowners.
This program was set up to encourage the construction of Novoclimat homes, including single-family and multi-generational homes and single-family homes with an attached dwelling. When purchasing a certified home, the owner receives $2,000 in financial assistance. First-time buyers can receive an additional $2,000 in assistance, bringing the grant to $4,000.
While all homeowners are eligible for the Novoclimat program, the home must meet certain criteria
related to its location, energy use, and construction.
Some cities offer grants, credits, and financial aid to attract families to their area. As these programs are
subject to change, check with your municipality to see which ones you may be eligible for.
No matter what your situation, don’t hesitate to talk to a Multi-Prêts mortgage broker to learn more.