In BC, there are some real advantages to shopping affordably for your first home and there are even some rare tax breaks offered to those who are jumping into the real estate market!
Buying a your very first home should be thrilling, enjoyable and only slightly terrifying. To make it more of the former, there are some perks to help you out as a First Time Home Buyer (FTHB) here in British Columbia. The professionals you are working with, your real estate power team, should be able to help you take full advantage of these benefits to maximize your buying experience (for more on how to pick the right agent to help you make your purchase, you can check out my other blogs by CLICKING HERE).
Let’s cover off three distinct advantages to being a FTHB: property transfer tax exemption, RRSP funds, and a tax credit.
*** I’ve provided links below each section so that you can read more and research more into the details of each subject, but we’ll address a high level overview now.
- Property Transfer Tax Break
This is the big Kahuna, the mammoth of the benefits you will get as a first-time home buyer. There is a HUGE tax savings if you purchase your first home under the Property Transfer Tax (PTT) price threshold. When you’re a FTHB, all the costs start to add up real fast (taxes, fees, insurance, utility bills etc), but lucky for you, the B.C. government has decided that they will offer one piece of major relief to your overall hit on the wallet. The provincial government notes that FTHBs are EXEMPT from having to pay property transfer tax (PTT) on their principal residence UP TO $500,000 (with a pro-rated, variable scale up to $525,000). However, if you decide to purchase a home for more than the magic $500,000 number, you will pay PTT on the entire purchase price. This is big news to know and can be a crucial factor in deciding which home is the right home for your first buy. To learn more about this exemption and the breakdown of the sliding scale for PTT, CLICK HERE.
- The Home Buyer’s Plan
Next up, The Home Buyer’s Plan, which is a program that permits a FTHB to withdraw $35,000 from their RRSP funds per calendar year to help with the purchase of their principal home. Now, of course, money rarely comes easy so there are naturally a bunch of terms and conditions associated with that type of withdrawal and the repayment of those funds etc., but for folks who need the help with buffing up their down payment or simply would like to diversify where their downpayment funds are coming from, The Home Buyer’s Plan is a great option. You can read more by CLICKING HERE.
- Home Buyer Credit
Finally, this last little credit is just a nice gesture to help recover some costs at the end of the day. You may qualify as a FTHB for what the Canada Revenue Agency terms the Home Buyer Credit (HBC). Essentially, the HBC is gifted to all FTHBs (so long as they meet the criteria) and it is a non-refundable tax credit, which is calculated by multiplying the lowest personal income tax rate for the year, for instance when this credit was introduced in 2009, the lowest tax rate was 15%, multiple that by $5,000, which would result in a tax credit of $750. To understand more and find out if you are eligible, CLICK HERE.
Now that you’re aware of these perks, it’s important to chat with your REALTOR®, mortgage broker and accountant to ensure that you are maximizing your savings and taking advantage of being a FTHB.
If you have further questions about anything real estate related, give me a call today!