The Canadian Homebuyer Incentive
After a four year run, The Canadian Homebuyer Incentive for first time buyers will be ending. The Canada Mortgage and Housing Corporation (CMHC) recently announced the discontinuation of this program setting March 21 2024 as the deadline for applications. While this change may affect affordability for homebuyers there are still options available throughout Canada. Lets take a look at what this means and the incentives accessible:
About the First Time Homebuyer Incentive
Launched in 2019 this initiative aimed to support first time buyers by reducing mortgage payments through shared equity mortgages. Under this scheme the government would co own the property and contribute either 5% or 10% towards the payment. However due to eligibility requirements such as income limits and down payment criteria it has been discontinued. To participate in the program, buyers’ combined qualified income could not exceed $120,000, at least one buyer had to be a first-time home buyer, and they had to have the minimum down payment.
Alternative Incentives for Homebuyers
- Home Buyers’ Plan (HBP): This plan allows individuals to withdraw up to $35,000 from their RRSP for a payment with repayments spread over 15 years. The limit is per person, meaning if you are buying a home with a partner then you both can withdraw up to $35,000 each, bringing the total amount to $70,000.
- First Home Savings Account (FHSA): Introduced in 2023 this program permits tax contributions of up to $8,000, for first time homebuyers. The account is like a tax-free savings account (TFSA), however, money withdrawn from the account must be used to purchase your first home to avoid paying tax on it.
- Land Transfer Tax (LTT) Refund: Offered in Ontario, British Columbia and PEI, new home buyers can claim up to $8,000 in rebates to help manage costs. This rebate can only be claimed once however.
- For those looking to buy their home the Home Buyers’ Amount (HBA) offers a $10,000 refundable tax credit. Homebuyers can declare $10,000 on their tax return for the year they bought their qualifying home. Qualifying homes include existing homes and homes under construction.
Different options are available depending on the province and city so it’s important to check with government sources for information, on specific incentives in your area. It is also important to educate yourself when it comes to the real estate cycles and purchasing property. Here are some great books to read about investing in real estate in Canada. You might also want to read up on potential hidden costs associated with buying a new home.
If you are curious about the steps involved in buying a new property, check out my blog post on the 15 Steps to buying a Condo. Stay updated by subscribing to our newsletter for tips and feel free to contact me for assistance, with navigating your home buying journey!
