BC First Time Home Buyer Programs
Programs & Exemptions for First Time Buyers in BC
Entering the market as a first time homebuyer can be a tall task! You will want to be up to date with the various first time home buyer programs that the Government of Canada has active to help you achieve your goal of purchasing a home! Check out our 2024 updated Buyers Guide on this website for the “7 Steps to Home Buying Success that every CANADIAN SHOULD KNOW”. There are lots of tips on maximizing your time and effort in the Buying process!
While many of these programs have requirements that do not fit everyone, there is generally something for everyone as listed below that can help you potentially save yourself some money along the way.
Please continue reading for the top first time home buyer programs and options that you’ll want to read through. Feel free to contact us at any time if there’s any questions that we can advise further on.
First time home buyers’ program (PTT Exemption)
This program reduces or eliminates the amount of property transfer tax you pay when you purchase your first home (up to a maximum of $8,000): As of April 1st, 2024 there is a Exemption (for a property of fair market value under $835,000) or partial exemption (for a property of fair market value of more than $835,000 but less than $860,000)
Also beginning April 1, 2024, qualifying buyers of a newly built home can be exempt from PTT on new builds with a fair market value of up to $1,100,000 – an increase from the previous limit of $750,000 – and partial exemptions are available on new builds up to $1,150,000.
There are several qualifications required, more information can be found here and hereFirst Home Savings Account (FHSA)
As of April 1, 2023, The FHSA is a registered savings plan that gives potential first-time homebuyers the ability to save up to $40,000 ($8,000 per annum) towards their home purchase without accruing tax. Similar to a Registered Retirement Savings Plan (RRSP), contributions to a FHSA are tax-deductible on your income tax return for the tax year you make them in.
Additionally, account holders can withdraw funds for purchasing or building their first home tax-free. Any funds not used can be transferred on a non-taxable basis to an RRSP or a Registered Retirement Income Fund (RRIF).
In essence, the FHSA leverages characteristics of Tax-Free Savings Accounts (TFSAs) and RRSPs to provide new homeowners a running start in an economically difficult period.
More details are available here and here
RRSP Home Buyer’s Plan
The Home Buyers’ Plan (HBP) is a program that allows you to withdraw up to $60,000 tax-free in a calendar year from your registered retirement savings plans (RRSPs) to fund your down payment for buying or building a qualifying home for yourself or for a related person with a disability. The money must be in your RRSP for at least 90 days before the purchase of your house for it to be valid.
The Home Buyer’s Plan is advantageous for Canadians because generally speaking, early withdrawals from RRSPs are considered taxable income. In this case, they’re exempt but you must start repaying the amount borrowed from the RRSP five years after you buy over a 15-year period.
Here are more details of the RRSP Home Buyer’s Plan.
First Time Home Buyer’s Mortgage Ammortization Extended
The federal government has proposed some new housing affordability measures geared toward making the Canadian housing market more affordable for first-time buyers. Among the new measures, first-time buyers will have the option to take out a 30-year amortization on their mortgage.
The 30-year amortization term, which would come into effect on August 1, 2024, comes with some caveats. Namely, the mortgage must be insured (priced below $1 million with a down payment of less than 20 per cent) and it must be a newly built home.
A news article discussing the topic in further detail
First Time Home Buyer’s Tax Credit
This credit allows first-time buyers in Canada the opportunity to recover some of the costs associated with their purchase. It helps offset legal fees, inspections, and other similar closing costs.
The First-time Home Buyer’s Tax Credit is a non-refundable credit of $10,000, which equates to a maximum tax rebate of $1500 as of 2023 ($750 until the 2022 budget was approved).
Here are more details for the First Time Home Buyer’s Tax credit.
GST New Housing Rebate
For newly built homes, first time home buyers are able to apply for a GST credit from the government and/or the developer. The GST in BC is equal to 5%, and as a home buyer you may be eligible for a rebate of 36% of the 5% GST. There is a full general rebate for homes that are under $350,000 that a buyer intends on living is an his/her permanent residence, and there are partial rebates up to $450,000.
Please see below for an example:
Assume the purchase price of a new home is $325,000 excluding G.S.T. The gross G.S.T. is $16,250 (5% of $325,000). The G.S.T. New Housing Rebate is 36% of $16,250 (5% GST), which is $5,850. Thus, the applicable G.S.T. is $16,250 (5%) less $5,850 (36% of 5% on $325,000) which equals $10,400 (GST payable after rebates)
For homes valued between $350,000.00 and $450,000.00, the rebate is gradually reduced and is calculated by using the following formula:
$5,850 x [$450,000 – the purchase price] / $100,000
For example, assume the purchase price of a new home is $400,000 excluding G.S.T. The G.S.T. New Housing Rebate is
$6,300 x [$450,000 – $400,000.00] / $100,000
which equals $3,150. The gross G.S.T. would be 5% of $400,000.00, which equals $20,000.00, less the partial G.S.T. New Housing Rebate of $3,150.00, for a net tax of $16,850.00.
More details of the GST New Housing Rebate can be found here
