government programs and regulations - linda pickering...first-time home buyers’ tax credit 1400...

Program

First-time buyers of new and re-sale homes are eligible to receive rebates of the provincial and Toronto land transfer taxes. The maximum provincial land transfer tax (LTT) rebate for first-time buyers is $4,000 and the maximum Toronto LTT rebate for first time buyers is $4,475. A FULL rebate of the Toronto land transfer tax is also available for ALL buyers who entered into Agreements of Purchase and Sale prior to December 31, 2007.

Details

Provincial LTT

• Provincial LTT is payable anywhere inOntario (including Toronto)

• Maximum provincial LTT first-timebuyer rebate is $4,000.

• For RESALE homes, the provincialrebate applies only to first-timebuyers who entered into Agreements ofPurchase and Sale AFTER December13, 2007.

• First-time buyers of NEWLYCONSTRUCTED HOMES are eligible forthe provincial rebate even if theyentered into Agreements of Purchaseand Sale prior to December 13, 2007.

• The provincial LTT for residentialproperties is calculated as follows (An

easy-to-use calculator is available at www.trebhome.com):

o 0.5% of the amount of the purchaseprice up to and including $55,000, plus

o 1% of the amount of the purchaseprice between $55,001 and $250,000, plus

o 1.5% of the amount of the purchaseprice between $250,001 and $400,000, plus

o 2% of the amount of the purchase pricebetween $400,001 and $2,000,000 plus

o 2.5% of the amount of the purchaseprice above $2,000,001

Toronto LTT

• Toronto LTT is payable only forproperties in the City of Toronto.

• Maximum Toronto LTT first-time buyer rebate is $4,475.

• ANY purchaser who entered into anAgreement of Purchase and Sale priorto December 31, 2007 is eligible for aFULL rebate of the Toronto LTT.

• Toronto LTT rebates are in addition toany provincial LTT rebate that thebuyer qualifies for.

• The Toronto LTT for residentialproperties is calculated as follows(An easy-to-use calculator is availableat www.trebhome.com):

o 0.5% of the amount of the purchaseprice up to and including $55,000, plus

First-time buyers of new and re-sale homes are eligible to receive rebates of the provincial and Toronto land transfer taxes.

Land Transfer Tax Rebates (Provincial and Toronto)

1400 Don Mills Road, Toronto, Ontario • M3B 3N1 • Tel: (416) 443-8100 • Fax: (416) 443-8129

Government Programs and Regulations

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o 1% of the amount of the purchase price between $55,001 and $250,000, plus

o 1.5% of the amount of the purchase price between $250,001 and $400,000, plus

o 2% of the amount of the purchase price between $400,001 and $2,000,000 plus

o 2.5% of the amount of the purchase price above $2,000,001

Provincial First-Time Purchaser Eligibility

To be eligible as a first-time buyer for the provincial LTT rebate:

• The purchaser must be at least 18 years old.

• The purchaser must occupy the home as their principal residence within nine months of the date of transfer.

• The purchaser cannot have ever owned an eligible home, or an interest in an eligible home, anywhere in the world, at any time.

• If the purchaser entered into an agreement of purchase and sale before December 14, 2007, the home must be a newly constructed home and the purchaser must be eligible for the Tarion New Home Warranty.

• If the purchaser has a spouse, the spouse cannot have owned an eligible home, or had any ownership interest in

an eligible home, anywhere in the world, while he or she was the purchaser’s spouse. If this is the case, no refund is available to either spouse.

• The purchaser cannot have previously received an Ontario Home Ownership Savings Plan (OHOSP) - based refund of land transfer tax.

Additional requirement:

• Beginning January 1, 2017, eligibility for the first-time homebuyers refund program is restricted to Canadian citizens and permanent residents of Canada.

• As a transitional measure, purchasers who entered into agreements of purchase and sale on or before November 14, 2016, would remain eligible for the refund regardless of citizenship or residency status.

• Purchasers who would otherwise be

eligible for a refund, but who are not Canadian citizens or permanent residents of Canada when the transaction closes, have 18 months following registration to become eligible. Upon obtaining Canadian citizenship or permanent resident status, these purchasers may apply for





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the refund within the 18-month period following registration of the conveyance or the date the unregistered disposition occurs.

Toronto First-Time Purchaser Eligibility

You are a first-time purchaser of a newly constructed or re-sale residential property, if the following criteria is met:

For conveyances and dispositions before March 1, 2017, and a rebate of up to $3,725:

The definition of a first-time purchaser is:

• The purchaser is at least 18 years of age.

• The purchaser must occupy the home as their principal residence no later than nine months after the date of the conveyance or disposition.

• The purchaser cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time.

• If the purchaser has a spouse, the spouse cannot have owned a home, nor had any ownership interest in a home, anywhere in the world while they were the purchaser’s spouse. If this is not the case, no rebate is available to either spouse.

For conveyances and dispositions of the eligible home on or after March 1, 2017, and a rebate of up to $4,475:

The definition of a first-time purchaser includes all of the above, and:

• The purchaser is a Canadian citizen or permanent resident of Canada. If the purchaser becomes a Canadian citizen or permanent resident within 18 months of the transfer, they may apply for and may qualify for the rebate.

• If you are eligible for a rebate of all or a portion of the MLTT you owe, your lawyer will be able to claim the rebate electronically through Teraview software when he/she registers your transfer/deed.

More Information

Provincial LTT:

Ontario Ministry of Finance:

1-866-668-8297

Toronto LTT:

City of Toronto: 416-338-0338





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DescriptionMortgage loan insurance is generally required by lenders when home buyers make a down payment of less than 20% of the purchase price. Mortgage loan insurance helps protect lenders against mortgage default, and enables consumers to purchase homes with a minimum down payment starting at 5%. The Government of Canada offers government-backed mortgage insurance with restrictions through its crown agency, Canada Mortgage and Housing Corporation (CMHC).

Details • Requires a minimum down payment of at least 5 per cent for a mortgage to qualify for government-backed insurance.

• Maximum amortization for mortgages is 25 years.

• Maximum home price that could qualify for government-backed mortgage insurance is capped at $1-million.

• Mortgage insurance is available to both first-time and repeat home buyers.

• For a purchase price of $500,000 or less, the minimum down payment is 5%. When the purchase price is above $500,000, the minimum down payment

is 5% for the first $500,000 and 10% for the remaining portion.

• A gift of a down payment from an immediate relative is acceptable for dwellings of 1 to 4 units. For eligible borrowers, additional sources of down payment, such as lender incentives and borrowed funds, are also permitted. Check with a lender for qualifying criteria and availability.

• Total monthly housing costs, including principal, interest, property taxes, heating, the annual site lease in the case of leasehold tenure, and 50% of applicable condominium fees, shouldn’t represent more than 32% of gross household income.

• Total debt load shouldn’t be more than 40% of your gross household income.

• Closing costs are in addition to the down payment, equivalent to 1.5% to 4% of the purchase price. Closing costs include but are not limited to one-time items such as lawyer fees,

GST/HST, municipal (if applicable) tax, and provincial land transfer tax, etc.

Other requirements may apply and are subject to change. For details, please contact a lender or mortgage broker.

Mortgage loan insurance is gen-erally required by lenders when home buyers make a down payment of less than 20% of the purchase price.

Requirements for Government-Backed Mortgage Insurance



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The CMHC Mortgage Loan Insurance premium is calculated as a percentage of the loan and is based on a number of factors such as the intended purpose of the property (owner occupied or rental), the type of loan (e.g., purchase/construction or refinance loan), and the size of down payment. See chart for premium details.

Financing Required Premium % of Loan

Up to and including 65% 0.60






90.01% to 95% Non-traditional Down Payment

4.50

* Premiums in Manitoba, Ontario and Quebec are subject to provincial sales tax. The provincial sales tax cannot be added to the loan amount.

For more information call CMHC at 1-800-668-2642 or access through www.cmhc.ca

Mortgage loan insurance is gen-erally required by lenders when home buyers make a down payment of less than 20% of the purchase price.

Requirements for Government-Backed Mortgage Insurance



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Details• To assist first-time home buyers with the costs related to the purchase of a home.

• The First-Time Home Buyers’ Credit (FTHBC) provides a 15 percent credit on a maximum of $5,000 of home purchase costs (e.g. legal fees, land transfer taxes, etc.), meaning maximum tax relief of $750.

• Applicable to first-time buyers purchasing a home closing after January 27, 2009.

• The FTHBC is claimable for the taxation year in which the home is acquired.

• An individual will be considered a first-time home buyer if neither the individual nor the individual’s spouse or common-law partner owned and lived in another home in the calendar year of the home purchase or in any of the four preceding calendar years.

First-time home buyers may be eligible for a 15 percent income tax credit for closing costs.

First-Time Home Buyers’ Tax Credit



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ProgramFirst-time home buyers may be eligible for a 15 per-cent income tax credit for closing costs.

For more information contact Service Canada at 1-800-622-6232 or visit www.fin.gc.ca

Program

You may be eligible to claim a rebate for a part of the HST you pay on the pur-chase price of a newly constructed home or the cost of building your home if:

• you buy a new or substantially renovated home (including the land or if you lease the land) from a build-er;

• you buy a new mobile home (including a modular home) or a floating home from a builder or vendor;

• you buy a share of capital stock of a co-operative housing corporation;

• you construct or substantially renovate your own home, or carry out a major addition (or hire another per-son to do so); or

• your home is destroyed in a fire and is subsequently rebuilt.

Details

• The purchase price of resale homes are exempt from the HST. The purchase price of newly constructed homes are subject to HST.

• New home buyers can apply for a 36% rebate of the GST (federal por-tion of HST) applicable to the pur-chase price to a maximum of $6,300 for homes costing $350,000 or less before GST. For new homes priced between $350,000 and $450,000 before GST, the GST rebate would be reduced proportionately. New homes priced $450,000 before GST or higher would not receive a rebate.

• New home buyers can apply for a 75% rebate of the PST (provincial part of HST) applicable to the purchase price to a maximum of $24,000.

Resale homes are exempt from the HST.

HST New Housing Rebate


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ProgramThe Home Buyers’ Plan (HBP) is a program under which you can, generally, with-draw up to $25,000 from your registered retirement savings plan (RRSPs) to buy or build a qualifying home.Withdrawals that meet all applicable HBP con-ditions do not have to be included in yourincome, and your RRSP issuer will not withholdtax on these amounts. However, before you canwithdraw funds you must have entered into awritten agreement to buy or build a qualifyinghome which you must occupy no later than oneyear after buying or building the home.If you buy the qualifying home together withyour spouse or other individuals, each of youcan withdraw up to $25,000. You cannot with-draw an amount from your RRSP under the HBPif you or your spouse owned the home morethan 30 days before the date of your withdrawal.

Details• Up to $25,000 per person could bewithdrawn tax-free from RRSPs to buy orbuild a principal residence. Couples —including common-law — will be able towithdraw up to $50,000.

• You have to meet the first-time buyer’s con-dition. You are not considered afirst-time home buyer if you or your spouseowned a home that youoccupied as your principal place of resi-dence in the past 5 years. To determine past5 years, the 4 yearspreceding the year you make yourwithdrawal plus the period in the year youmake your withdrawal ending 31 daysbefore your withdrawal is the rule adopted.

• Home buyers withdrawing funds donot have to pay income tax on the amountwithdrawn, as long as the funds are repaidinto an RRSP in the future.

• The 15-year repayment period will begin inthe second calendar year following the calen-dar year in which the withdrawal is made. Inaddition, a qualifying home must generallybe acquired before October 1 of the calendaryear following the year of withdrawal. Forexample, those making withdrawals underthe plan in 2009 will have until October 1,2010 to acquire a qualifying home and theirfirst annual repayment willbe due by the end of 2011 orthe first two months of 2012.

• A special rule denies a taxdeduction for contributionsto an RRSP that are with-drawn within 90 days of theRRSP deposit being made.Consequently, to get thenormal tax break for a con-tribution and to use thosefunds under the plan, themoney must be in yourRRSP for at least 90 daysbefore a withdrawal is made.

Existing homeowners can use the HBP to pur-chase a more accessible home or a home for adisabled dependent relative where the individ-ual withdrawing the funds:

• qualifies for the disability tax credit (DTC)and is buying a home that is more accessi-ble for the individual or is better suited for

If you buy thequalifying hometogether with your spouse orother individuals,each of you canwithdraw up to$25,000.

RRSP Home Buyers’ Plan


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You can participate in theHBP more than once if:• your HBP balance for yourprevious participation iszero on January 1 of theyear you want your newparticipation in the HBP tooccur; and

• you meet the first-timebuyer’s condition and allother HBP conditions thatapply to your situation.

the care of the individual;• is related to a disabled individual who qual-ifies for the DTC and is buying a home for the benefit of the dis-abled individual that is more accessible for,or better suited for, the care of the disabledindividual, or;

• is related to a disabled individual who quali-

fies for the DTC and is withdrawing anamount for the disabled individual to buy ahome that is more accessible for, or bettersuited for, the care of the disabled individual.

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A special ruledenies a tax deduction for contributions toan RRSP that arewithdrawn within90 days of theRRSP depositbeing made.

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