Are you a First Time Home Buyer? The B.C. government will begin offering interest-free loans to assist first-time homebuyers in covering the cost of their down payment. The B.C. Home Owner Mortgage and Equity Partnership program will provide a maximum of $37,500 — or up to five per cent of the purchase price — with a 25-year loan that is interest-free and payment-free for the first five years. You will pay no monthly interest or payments over the first 5 years as long as the home remains your principal residence. After the first 5 years you will begin making monthly payments at current interest rates. The maximum purchase price for the loan is $750,000.00 and you must be a permanent Canadian resident for the past 5 years and a BC resident for the past year. Your income or combined income must be $150,000.00 or less and you must be pre-qualified for a high-ratio insured mortgage. You may purchase a home anywhere in BC. The province will start to accept applications for the program on January 16, 2017.
As a first time home buyers are also eligible for an exemption from the Property Transfer Tax. Eligibility requirements for the exemptions are that you must be a Canadian citizen or a Permanent Resident. You must have lived in BC for 12 consecutive months immediately before the date you register the property or have filed at least 2 income tax returns as a BC resident n the past 6 years. The property must be your principal residence and you will not have owned an interest in a principal residence anywhere in the world at any time. The property you are purchasing must have a fair market value of 475,000.00 or less and be 1.24 acres or smaller. You may qualify for a partial exemption from the Property Transfer Tax if the fair market value of the property is less than 500,000.00.
You may also be eligible for the First Time Homebuyers tax credit through the Government of Canada’s Economic Action Plan. You will qualify if you or your spouse or common-law partner acquired a qualifying home and you did not live in another home owned by you or your spouse or common-law partner in the year you purchased or in any of the 4 preceding years. The credit is based on $5,000.00 multiplied by the lowest federal income tax rate for that year. As an example the lowest federal income tax rate for 2014 was 15% so the value of the credit would be 750.00.
First time home purchasers (you are considered a first-time home buyer for this program if you have not owned a home for the past 4 years ) can also withdraw up to $25,000 of your RRSP savings tax free ($50,000 for a couple) to help finance your down payment on a home, You are required to return the funds to your RRSP with an annual payment over the next 15 years. If you do not make the annual payment to your RRSP the annual amount owing will be added to your income and you will be taxed on it.