There are few milestones more exhilarating than the purchase of your first home. As exciting as the experience is, it can also be very intimidating. Owning a house comes with many responsibilities and is the largest investment most people will ever make. However, the last few years have been particularly unmanageable for first-time buyers.
Soaring demand created intense competition for every listing, which drove prices up well out of the range of many people. Some hopeful buyers threw up their hands and removed themselves from the market. Now, conditions seem to have settled. As interest rates and inflation rise, there is less competition in the Peterborough real estate market.
In addition, more listings are available now than we have seen in a long time. For certain people, this is excellent news.
Prices have decreased, and some first-time buyers are returning to the market. It’s the perfect time to review some of the government programs available to help young buyers get into their first house.
The Home Buyer’s Plan
Coming up with a down payment is difficult for most first-time buyers, especially if you’re paying rent in the meantime. For many people, there is just not much left to save once everything else is paid. However, you might be in luck if you have an RRSP on your own or through your employer.
The Home Buyer’s Plan allows you to pull out $35,000 from your RRSPs to fund your down payment without tax penalties. When buying with a partner who is also a first-time buyer, you can double the amount to $70,000.
To qualify, you must be a resident of Canada and intend to live in the house. However, the program applies to duplexes, triplexes and single-family homes with secondary suites. If you ever wanted to purchase a home that doubles as an investment property, the Home Buyer’s Plan can give you the opportunity!
If you pull from your RRSP, you must repay the amount within 15 years. Otherwise, you will pay income tax on the amount outstanding.
You can get more details about the Home Buyer’s Plan here.
Here are just a few of the many reasons to buy your first home in Peterborough!
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The First Time Buyer’s Tax Credit
Your home is likely the most expensive endeavour you will ever undertake. A big part of the burden is the closing costs, including commissions, lawyer’s fees, land transfer taxes, etc. You cannot include many of these expenses in your mortgage, so you must pay them upfront before taking possession of your new house. The tax credit can help offset some of these costs for first-time buyers.
You can claim up to $5000 on your income tax, which could add up to $750 to your return. This may not seem like much, but everything helps when buying your first home.
To qualify for the credit, you must purchase the home as your primary residence. Single-family homes, semi-detached houses, townhouses, mobile homes, and condos all apply.
Find out more or apply for the tax credit here.
Ontario Land Transfer Tax Rebate
Land transfer taxes are a significant expense when buying a property and must be paid upfront. The tax can range from 1% to 2.5% of the purchase price, which adds up quickly. Luckily, as a first-time buyer, the provincial government offers you an immediate refund on some or all of the tax.
If a home is $368,000 or less, you would get an immediate rebate on the whole amount. Houses more than $368,000 qualify for a maximum refund of $4,000.
On a $500,000 property, you would generally be looking at a tax of $6,475 at the current rate. However, once you add the rebate, your cost is reduced to $2,475.
The Ontario Land Transfer Tax Rebate goes a long way to making your first home more affordable!
To qualify, you must be at least 18 years old and a Canadian citizen or a permanent resident.
You can find out more about the rebate here.
Looking for a way to make your first home more affordable? Why not consider adding a secondary suite?
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- How To Build Equity And Improve Home Affordability With Secondary Suites
- Everything You Need To Know About Carriage Homes
GST /HST New Housing Rebates
Resale homes are not subject to GST or HST, but new construction projects are. As you can imagine, this significantly adds to your closing costs. However, once again, you may qualify for a rebate.
Though not specifically a first-time buyer program, this federal GST/HST rebate can help reduce closing costs when buying a newly constructed home or condo.
Discover more about the GST/HST rebate program here.
Buying your first home can be intimidating, but we are here to help! Find out more about our buying process here.
Interested in seeing what it’s like to help buyers as a top real estate agent in Peterborough? Check out a day in the life of Jeff here:
