First-Time Home Buyers Incentives in British Columbia
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First-time home buyers in British Columbia have few incentives available to help offset the costs of homeownership. However, first-time buyers in the province can take advantage of the federal programs offered to help offset the upfront cost of purchasing their first home.
Key Takeaways
- British Columbia’s First Time Home Buyers’ Program can help eliminate or reduce the amount of property transfer taxes owed.
- Federal programs provide additional financial support for first-time buyers in the province.
- In some cases, eligibility for provincial incentives in BC is not limited to first-time buyers.
British Columbia First-Time Home Buyer Incentives
First-time home buyer incentives in British Columbia are designed to assist with the upfront and ongoing costs of purchasing your first home. The First Time Home Buyers’ Program reduces or eliminates the property transfer tax you pay when purchasing your first home. The Home Owner Grant, while not limited to first-time buyers, helps reduce the property taxes you pay each year.
First Time Home Buyers’ Program
The first time home buyers’ program eliminates or reduces the amount of property transfer tax you pay when purchasing your first home. To qualify for the program, you must live in British Columbia for at least a year immediately before registering the property or have filed at least 2 income tax returns as a resident of the province in the last 6 taxation years immediately before the registration date. Additionally, you must have never owned or had interest in a property that was your principal residence anywhere in the world and have never previously received a first time home buyers’ exemption or refund.
You may also qualify for a full or partial exemption of the property transfer taxes when purchasing a newly built home. You are not required to be a first-time buyer to qualify under the newly built home exemption.
Home Owner Grant
The Home Owner Grant reduces your property taxes on your principal residence. While not limited to first-time buyers, this grant is available to all homeowners who pay property taxes to a municipality or the province. Homeowners must pay at least $350 in property taxes before receiving the grant. For first-time buyers purchasing a property, you may be able to claim the grant in the current tax year if the previous owner did not claim the grant on the property.
To qualify, you must be the registered owner of the residence, a Canadian citizen or permanent resident, live in British Columbia, and occupy the home as your principal residence.
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Federal First-Time Home Buyer Programs
In addition to the provincial programs offered in British Columbia, various programs at the federal level can be leveraged to offset some of the costs of homeownership.
RRSP Home Buyer’s Plan
The Home Buyers’ Plan allows first-time buyers to withdraw up to $60,000 (or $120,000 jointly as a couple) from their Registered Retirement Savings Plan (RRSP) to use toward purchasing a home. Withdrawals under the plan are tax-free, acting like a loan with a 2-year grace period where no repayments are required. At the end of the grace period, the amount withdrawn must be repaid in equal installments back into the RRSP within 15 years to remain tax-free.
Home Buyers’ Amount
The Home buyers’ amount allows first-time home buyers to receive a tax rebate of up to $1,500 at tax time. You can claim up to $10,000 on your income tax return or split the amount between eligible spouses, common-law partners, or other eligible persons jointly acquiring the home to receive the rebate. To be eligible, you must acquire a qualifying home and be considered a first-time home buyer unless you are a person with a disability.
GST/HST New Housing Rebate
The GST/HST New Housing Rebate provides a rebate on the federal portion of the Goods and Services Tax (GST) or Harmonized Sales Tax (HST) paid when buying a new or substantially renovated home. The rebate amount depends on the province where the home is located and whether a rebate is available on the provincial and federal portion of taxes.
Frequently Asked Questions (FAQ) on First-Time Home Buyer Incentives in British Columbia
How much do first-time home buyers have to put down in British Columbia?
As a first-time buyer in British Columbia, the amount you are required to put down will depend on the home’s purchase price. You will need at minimum 5% of the purchase price of a home valued up to $500,000. For homes with a purchase price between $500,000 and $1,499,999, you will need 5% down on the first $500,000 and 10% on the remainder. For homes valued at $1.5 million or more, you will require a 20% down payment.
Can any resident qualify as a first-time home buyer in British Columbia?
To qualify as a first-time home buyer for the provincial incentives, you must have been a resident of British Columbia for at least 1 year or have filed 2 income tax returns as a resident in the last 6 tax years immediately before registering the property.
How much property transfer tax can I be exempt from paying as a first-time home buyer?
The property transfer tax exemption applies to the first $500,000 of the property purchase price. If you purchase a home valued at $500,000 or less, you will be exempt from paying any property transfer tax. If the property’s purchase price is more than $500,000, the maximum exemption amount you can receive is $8,000 off the property transfer tax you will pay.
Final Thoughts
While British Columbia may not offer as many programs or incentives to first-time buyers as other provinces, understanding what is available at the provincial and federal levels can help ease the financial challenges of purchasing your first home. By taking advantage of programs like the RRSP Home Buyer’s Plan, you can work toward making your dream of homeownership a reality.
Are you a first-time home buyer ready to buy in British Columbia? Contact nesto mortgage experts for personalized advice and explore your financing options.
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