GREATER TORONTO – If you are considering buying your first home in 2017, you are not alone.
Far from it, in fact – an October 2016 poll commissioned by the Toronto Real Estate Board (TREB)* revealed that first-time buyers will likely account for more than half of 2017’s home sales across the GTA.
While the process of searching for your first home should be an exciting time, it does also involve some learning and hard work – for example, you have likely never worked with a real estate sales representative or a brokerage before. You might not even know what home type you want – although, luckily, part of an agent’s job is to help you decide!
When it comes to the toughest part of buying your first home – affording it – there are two helpful tools available to all Canadians:
1. First-Time Home Buyer Tax Credit (HBTC)
Since the introduction of the Economic Action Plan, Canada’s federal government has offered a yearly income tax break for those who purchased their first (qualifying) home during the tax year.
For the 2016 tax year, the relevant passage can be found on Line 369 of your income tax return, where it is entitled “home buyers’ amount”. For first-home purchases completed in 2016, the amount you can claim is $5,000 (although this may be subject to change for the 2017 tax year and beyond).
For additional details on the HBTC – including a list of the home types which qualify – you can check out the Canada Revenue Agency’s official page at http://www.cra-arc.gc.ca/hbtc/.
2. Canada Home Buyer’s Plan (HBP)
The HBP is another helpful program that allows a first-time buyer to withdraw up to $25,000 from their registered retirement savings plan (RRSP), which can then be used towards purchasing the home. Generally, the entire withdrawal should be completed within one calendar year.
When you use the HBP form to withdraw funds from your RRSP, that withdrawal is protected from income tax that would otherwise be applied – as long as you are staying within the $25,000 cap.
Those who choose to make a withdrawal using the HBP are required to “repay” the withdrawn amount back into either RRSP(s), PRPP, or SPP. Generally, the repayment period is 15 years. Until you have fully repaid, the CRA will annually send you a HBP “statement of account” to help you keep track of how much you have paid, and how much balance is remaining.
These are just a few of the quick facts concerning the HBP – if you are interested in taking advantage of the program, you will definitely want to check out the official information page at http://www.cra-arc.gc.ca/hbp/. Helpful links provided by the page include how to cancel participation, how to report payments, and how to utilize the MyCRA mobile application to review your balance.
While both processes can be tricky to navigate, you can make the process easier by signing a buyer representation agreement with a licensed real estate sales representative. They are there to provide insight on every step of your first home buying experience – from helping you calculate your budget, to finding the right property for you and negotiating the best deal possible when it is time to make an offer. To get in touch with a member of Living Realty’s sales team, feel free to use our quick and easy contact form.