First Time Home Buyers
Provincial Benefits:
· Property Transfer Tax exemption
The provincial property transfer tax exemption applies to purchases under $500,000 and is pro-rated for purchases between $500,000-$525,000. (https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions/first-time-home-buyers)
· New build purchases
No property transfer taxes on purchases from developer up to $750,000. Purchase prices over this amount will have full transfer taxes. (https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions/newly-built-home-exemption)
Federal Programs:
· First Time Homebuyers Tax Credit
First Time Homebuyers get to apply for at non-refundable tax credit that can lower taxes owed up to $750. Apply for this benefit when you file your taxes the following spring. Starting in 2023, this number will be doubled. (https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-31270-home-buyers-amount.html)
· Home Buyers’ Plan (using RRSPs)
You can withdraw up to $35,000 from your RRSPs. Starting two years following the withdrawal, you will start paying back this money over a 15-year period (1/15th each year). If you don’t replace the RRSPs, then you will be required to pay taxes on it.
To access the money, you need to fill out the appropriate forms at your bank and form 1036 with CRA (https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t1036.html)
· Tax Free Home Savings Account
The federal government is promising to introduce a Tax Free Home Savings Account that will allow you to contribute up to $8,000 a year to a maximum of $40,000. Contributions would be tax deductible and withdrawals – including investment income – would be non-taxable, similar to a TFSA. More details are yet to come.