Taking advantage of first-time home buyer tax benefits

As a first-time home buyer in Canada you may be eligible to take advantage of two great money-saving benefits.

First-Time Home Buyers’ Tax Credit

The First-Time Home Buyers’ Tax Credit (HBTC) was introduced by the federal government to help Canadians purchase their first home or to get back into the housing market. The credit amount is determined by multiplying the lowest personal federal income tax rate for the year (15% in 2016) by $5,000. For 2016, the total allowable credit is $750.

The HBTC is non-refundable, which means it can only be used to reduce the amount of tax you may owe. The credit should be claimed on your federal income tax return.

You are eligible for the HBTC if:

• You (or your spouse or common-law partner) bought a qualifying home in Canada
• The home will be your principal residence
• You (or your spouse or common-law partner) did not own and live in another home in the year of purchase or any of the four prior years (first-time home buyer)

Learn more at the Canada Revenue Agency (CRA) website.

Home Buyers’ Plan

The Home Buyers’ Plan (HBP) allows you to withdraw money from your Registered Retirement Savings Plans (RRSPs) tax-free to help with the purchase of your first home.

Here are some of the conditions for participating in the HBP:

• You must be considered a first-time home buyer
• You will need a signed agreement to buy or build a qualifying home
• Contributions must be in your RRSP for at least 90 days before they can be used for the HBP.

RRSP withdrawal limits and details:

• You (and your spouse or common-law partner) can each withdraw up to $60,000 from your RRSPs. HBP withdrawals from locked-in and group RRSPs are not allowed.
• You have to be a resident of Canada at time of withdrawal.
• Neither you nor your spouse or common-law partner can own your home for more than 30 days before the withdrawal.
• Your withdrawal does not need to be included as income on your annual tax return, meaning that you will not be taxed on any money you withdraw.
• At least 1/15 of your withdrawal will need to be repaid to your RRSP each year starting within:
  - two years if your first withdrawal was taken on or before December 31, 2021
  - five years if your first withdrawal was taken between January 1, 2022, and December 31, 2025

To learn more about HBP features and eligibility requirements, visit the Canada Revenue Agency (CRA) website.

For strategies on how to get the most out of your RRSP—and to make sure it’s a good option for you—speak with a financial advisor.

You may also want to contact a Mortgage Specialist to make sure you’re taking advantage of all the benefits available to you as a first-time home buyer.