Benefits of first-time home buyer programs

If you are a first-time home buyer, buying your first home is a very exciting time but it can also be stressful and you’ll have lots of questions.

You might be wondering about what programs are available to assist you with your home purchase.

Affordability remains a key challenge for first-time homebuyers but a variety of programs are available to provide support. Here is an updated overview of these initiatives:

First Home Savings Account (FHSA)

Launched in April 2023 following its announcement in the 2022 federal budget, the FHSA is a registered savings account designed to help Canadians save for their first home. With annual contributions capped at $8,000 and a lifetime limit of $40,000, this account offers significant tax advantages—contributions and investment income are tax-deductible and withdrawals for a home purchase are tax-free.

Home Buyers' Plan (HBP)

Since its introduction in 1992, the HBP has been a cornerstone program for first-time buyers. It allows individuals to withdraw funds tax-free from their RRSPs to put toward a home down payment. Initially capped at $20,000, the withdrawal limit has been periodically increased, with this year’s federal budget it rose to $60,000 per individual (or $120,000 for a couple). Repayments must be completed within 15 years, making the HBP a versatile tool for building home equity.

Land transfer tax rebates

First-time buyers in B.C. can benefit from rebates on land transfer taxes. These savings help reduce the upfront costs associated with purchasing a home, making it more attainable for new buyers.

First-Time Home Buyers' Tax Credit (HBTC)

Introduced in 2009, the HBTC provides relief from the expenses related to buying a home. In December 2022, the federal government doubled this credit, allowing eligible buyers to claim a non-refundable tax credit of up to $10,000. This equates to a $1,500 reduction in income tax payable.

GST/HST New Housing Rebate

This rebate offers savings on GST or HST paid for new-build homes, pre-construction purchases, or major renovations. The rebate amount varies based on the home’s purchase price, providing support for buyers pursuing new housing options.

With these programs, first-time buyers have access to a robust suite of tools to make homeownership more attainable. Whether saving for a down payment, reducing upfront costs, or receiving tax credits, these initiatives provide crucial support in navigating the housing market.

This will most likely be the largest financial transaction you will have in your life time so if you have questions please feel free to reach to me at [email protected] or you can book a time for a chat here on my calendar www.calendly.com/april-dunn

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.