Dreaming Of Buying Your First Toronto Home?

Owning your own home is a life-long dream for most people. In addition to pride of ownership, owning a home means security. Furthermore, buying a house is a sound financial investment. However, buying a home involves a lot of complex matters you might not be familiar with, such as financing, inspections, making an offer, legal aspects and closing a deal.

A good way to prepare yourself for the home buying process is by downloading a FREE online home buyers seminar, a full 100 page manual designed to help you through the complete home buying process.

Click here for more information about this seminar.

INCENTIVES FOR FIRST-TIME HOME BUYERS

Both the government of Canada and the Ontario government have established programs to assist first time home buyers. The two best known programs are the RRSP Home Buyer's Plan and the Land Transfer Tax rebate.

Home Buyer's Plan

The RRSP Home Buyer's Plan (HBP) was introduced by the federal government, and allows first time home buyers to withdraw up to $25,000 from their RRSPs tax free to use towards the purchase of a home.

To qualify as a first time home buyer, purchaser must not have lived in a home owned by himself or his spouse in the last five years. If both you and your spouse qualify under the Plan, you can each withdraw up to $25,000 from your RRSPs for a total of $50,000.

Before you are entitled to withdraw the money from your RRSP, you must have entered into a written agreement to purchase or build a home that you intend to occupy as your principal residence. The purchase of a cottage, for example, would not qualify for this program because it is not a principal residence.

Money can be withdrawn from your RRSP provided it has been in your RRSP for at least 90 days. If you have signed an Agreement of Purchase and Sale and you have at least 90 days until your closing, you can open an RRSP and make a contribution, receive the tax deferred benefit and then withdraw the same money and put it towards the purchase of your home.

Your first repayment is due the second year following the year in which you made your withdrawals. You have up to 15 years to repay the amount that you withdrew under the HBP. Generally, for each year of your repayment period, you have to repay 1/15 of the total amount you withdrew until the full amount is repaid to your RRSPs. If you do not pay the full amount back to your RRSP within 15 years, the amount outstanding will be subject to tax when you file your income tax return in the following year.

What if you don't have any money in your RRSP?

Do not worry, you can still take advantage of the Home Buyers Plan (HBP). If you are earning income, or have earned income in the past few years, you are entitled to contribute to an RRSP. What is not very well known about the HBP is that you can contribute to an RRSP retroactive. Therefore, check to see what your RRSP contribution limit is. It is shown on your previous years Notice of Assessment, or call Revenue Canada.

Provincial Land Transfer Tax Refund

In the 2007 Ontario Economic Outlook and Fiscal Review, the government proposed to expand the Land Transfer Tax Refund Program to include first-time homebuyers of resale homes for agreements of purchase and sale entered into after December 13, 2007. This measure was included in Bill 44, Budget Measures and Interim Appropriation Act, 2008, and, having received Royal Assent on May 14, 2008, is now law.

As a result of this change, first-time homebuyers of resale homes may now be able to receive a refund from the provincial government of up to $2,000 of the land transfer tax paid.

To qualify for a refund:

you must be at least 18 years old;

you cannot have previously owned a home, or an interest in a home anywhere in the world;

your spouse cannot have owned a home, or an interest in a home anywhere while he/she was your spouse.

The maximum refund is $2,000 and qualifying purchasers must apply for the refund no later than 18 months after registration of the home if they do not receive the refund at the time of registration.

For information about the refund, visit the website of the Ontario Ministry of Finance.

Municipal Land Transfer Tax

As a taxation measure granted under the City of Toronto Act,2006, Toronto City Council approved a new Municipal Land Transfer Tax effective February 1, 2008 that will be applied to purchases on all properties in the city of Toronto in addition to the Province's Land Transfer Tax.

You may be eligible for a rebate of the MLTT if you are a first-time purchaser of a newly constructed or re-sale residential property with two or less single-family residences. The rebate for first-time purchasers is up to a maximum of $3,725.00.

For information about the refund, visit the website of the City of Toronto.

Home Buyers' Tax Credit (HBTC)

The HBTC is a new non-refundable tax credit, based on an amount of $5,000, for certain home buyers that acquire a qualifying home. The HBTC is calculated by multiplying the lowest personal income tax rate for the year (15% in 2009) by $5,000. For 2009, the credit will be $750.

You will qualify for the HBTC if:

you or your spouse or common-law partner acquire a qualifying home; and

you did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years.

Sales Tax

On July 1, 2010, Ontario is introducing a federally administered Harmonized Sales Tax (HST) that will apply to most purchases and transactions.

The HST will apply to newly constructed homes, but will not apply to resale homes. Buyers of new homes will receive a rebate of up to $24,000 regardless of the price of the new home. This rebate ensures that buyers of homes priced up to $400,000 (about three-quarters of new homes built in Ontario) will, on average, pay no more - or possibly even less - tax than under the PST system.

Buyingblock Mortgages Inc.

571 King Street West, Toronto, Ont. M5V 1M1 - Lic. # 10645

alltorontomortgages

Michael Pezzack

Mortgage Consultant

Lic. # 08003302

tel: 416-850-2642

fax: 416-850-2643

cell: 416-358-1295

toll free: 1-866-644-4613

Scott Henson

Mortgage Consultant

tel: 647-238-8232

fax: 416-850-2643

toll free: 1-866-644-4613