For many Canadians today, the dream of home ownership can feel just out of reach. Prices are skyrocketing, especially in urban centres, and banks have tightened their mortgage lending. What is a prospective homeowner to do?
Fortunately, the federal government offers several incentive programs for first-time buyers. Here is a handy guide of the incentives available to you.
Home Buyer’s Plan
If you apply your RRSP savings towards the purchase of your first home, you can waive the early withdrawal tax penalty. Your tax-free withdrawal of up to $25,000 for an individual or $50,000 per couple must be paid back over 15 years, but it is a meaningful contribution to your down payment.
First-Time Home Buyers’ Tax Credit
You are also eligible to claim a portion of your home on your personal tax return in the year of purchase. Your $5,000 income tax credit can provide you with up to $750 in tax relief.
GST/HST New Housing Rebate
You can recover thousands in tax on your purchase of a new construction home if you are eligible for this rebate. You can also apply it towards substantial renovations on an older home.
CMHC Mortgage Loan Insurance Programs
These programs offer lending support to help prospective buyers who may have difficulties getting the mortgage loan they need from banks. They also provide incentives for certain purchasing options.
For a modest premium, the CMHC Purchase allows buyers to purchase with only a five percent down payment. The CMHC Newcomer and Self-Employed programs allows permanent residents and non-permanent residents, as well as entrepreneurs more flexibility when borrowing than a bank will provide. The CMHC Improvement and Green Home Programs incentivize the purchase of fixer-uppers and energy efficient homes.
Reach out to your financial advisor to learn more about how these government programs can help you become a homeowner.