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First Home Buyer's Plan
It's now a whole lot easier than you may think to buy
your first home and with interest rates near all time lows,
there's rarely been a better time!
If you (or someone you know) wants to buy a first home and
can answer YES to all of the following four
questions, you (or they) should qualify for the
Government of Canada "First Home Buyer's Plan".
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- Is this the first time you've used the Home
Buyer's Plan?
- Do you intend to use the home you purchase as your
principal residence?
- Are you a Canadian resident? (Canadian citizenship
is NOT a requirement)
- Is this the first home you've bought (or shared in)
during the past 5 years?
USE THE FORM AT THE
BOTTOM OF THIS PAGE TO GET MORE INFORMATION
ON THIS GOVERNMENT OF CANADA PROGRAM.
What is the Home Buyer's Plan (HBP)?
The HBP is a Government of Canada program to make home
ownership easier for first time home Buyers. It allows you
and your spouse or partner to take up to $20,000 each out of
your R.R.S.P. (Registered Retirement Savings Plan) tax free
and interest free to be used toward the purchase of your
first home.
But I don't have any funds in an
R.R.S.P.
No problem! You can still take advantage of this program. If
you have been earning income for the last few years you
should qualify to make a significant contribution into a tax
deductible R.R.S.P. This will reduce your income tax payable
in the following year and these tax savings can be added to
your down payment as well. What could be sweeter than buying
a home with money you would have otherwise turned over to
the tax man?
But I don't have any money to make
a contribution.
Again, no problem. Arrangements have already been made with
major lenders for qualified first home buyers to borrow the
funds required to open or add to a tax deductible R.R.S.P.
This will give you a tax rebate which can then be used as
part of your down payment. 90 days later you can withdraw
the funds from your R.R.S.P. to pay off the loan. The
program does require you to repay the withdrawn funds back
into your R.R.S.P. over the ensuing 15 years failing which
you would have to pay income tax on 1/15th of the total in
any year that it was not repaid. This is a win-win situation
with the benefit being that 15 years from now you can have
both a Retirement Savings Plan and a home with 15 years of
equity built up in it.
How do I find out how much I can
contribute to an R.R.S.P.?
Review your tax returns going back to 1991. You should have
received a letter from Revenue Canada following your filing
which will specify exactly how much you were entitled to
contribute to an R.R.S.P. Add up the total amount over the
years to a maximum of $20,000 each, which is the total you
and your spouse or partner can each withdraw under this
plan. (Two people can withdraw $40,000). If you can't find
the information you need, call Revenue Canada for help.
What other programs do I qualify
for as a "first time buyer"?
In the Greater Vancouver area, if the home you purchase
costs $250,000 or less, you can buy with as little as a 5%
down payment. You will of course have to qualify to handle
the resulting mortgage payments, property taxes etc. Your
qualification is based on your gross income versus total
debt service. This and other programs have been designed to
help first time buyers. By simply taking a moment with the
form below you will receive additional information and help
in determining your qualifications. There is no obligation
and it always pays to know your options. This should be a
first step for anyone considering a home purchase.
For the first time buyers that are looking to buy in the Mississauga Real Estate area, the above is a home buying plan for you. This is what you need to know and how to obtain the information needed to be successful with your first home purchase.
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