Financial, Legal, & Realty

Najmi Muhammad Explains the Programs Available in Canada for First-Time Home Buyers

First-time homebuyers in Ontario, Canada have many different opportunities to help them make their purchase. The Canadian government supports first-time homebuyers with a comprehensive suite of benefits. In 2019, Prime Minister Justin Trudeau signed a plan that would invest up to $941 million over three years in equity positions for first-time buyers. This plan will help thousands of Canadians achieve their dreams of homeownership.

Najmi Muhammad, a Canadian entrepreneur, and real estate expert details the various plans in place that will help all residents of Canada and the province of Ontario buy their first homes.

First-Time Home Buyer Incentive

The First-Time Home Buyer Incentive is a new program that takes a novel approach to home finance. This program will take effect on September 2, 2019. Borrowers who have the down payment for a mortgage are able to put in an application for the government of Canada to finance part of their purchase in a shared-equity arrangement.

In order to take advantage of the program, Canadian homebuyers will need to have a maximum qualifying income of $120,000. They can finance up to 4 times their qualifying income during the home purchase process.

The Incentive reduces the monthly mortgage payment for qualifying first-time homebuyers. This program does not require payments on an ongoing basis. The Incentive must be repaid within 25 years of the original investment, or whenever the property is sold. The repayment is based on the fair market value of the property. The Canadian government will spend $941 million on this incentive over the next 3 years.

First-Time Home Buyers’ Tax Credit (FTHB)

The FTHB program assists homebuyers with all of the costs and fees that are associated with purchasing a home. Legal fees, land transfer taxes, and disbursements are included. This program provides a $5,000 non-refundable credit amount on a home acquired after January, 2009. For an individual, the credit provides $750 in federal tax savings.

To register for this tax credit, says Najmi Muhammad, an individual or both spouses (married or common-law) must buy a home that qualifies under the provisions of the credit. The individual or couple must not have lived in another self-owned home in the year when the new property is purchased or in the four years preceding. This qualifies the buyer as a first-time homebuyer.

This program is also available to Canadian homebuyers with disabilities, who do not need to be first-time homebuyers to qualify.

Home Buyers’ Plan

This special plan allows a first-time homebuyer to withdraw $35,000 from a registered retirement savings plan (RRSP) to build or buy a qualifying home, whether for your own family or for a relative with a disability. This program helps to avoid the penalties associated with early withdrawal from a retirement savings plan.

GST/HST New Housing Rebate

This rebate may allow a new homeowner to recover some of the money spent on the GST or HST when buying a home. GST is a 5% general sales tax instituted by the Canadian government, and HST is a tax rate that applies to many of the provinces. Some provinces have their own sales tax and are not eligible for the HST portion of this rebate.

Ontario Land Transfer Refunds

In Ontario, people who have never owned a home may qualify to have their land transfer tax refunded on the first $368,000 of the home’s value. The maximum amount that can be refunded is $4,000. The difficult part of qualifying for this provision is that the buyer must never have owned another home anywhere in the world or the credit will be reduced.

Home Buying Opportunities in Canada

This is an excellent time to buy a new home in Canada. Canada has an impressive number of programs aimed at reducing the financial burden on first-time homebuyers. Ontario has its own programs as well. Najmi Muhammad shares these tax credits and mortgage programs in hopes that more Canadians will consider becoming first-time homebuyers.

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Adrian Rubin

Adrian Rubin is a freelancer, creative arts director for various marketing and advertising companies in the New York area. Adrian Rubin specializes in making memorable campaigns. You can learn more about his services here:
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