First-Time Home Buyers Incentives in Prince Edward Island

First-time buyers in Prince Edward Island have a few provincial incentives to help make homeownership more affordable. From interest-free loans to exemptions on the Real Property Transfer Tax, these incentives can help reduce the financial burden of being a first-time homebuyer.

Key Takeaways

• PEI is piloting a Down Payment Assistance Program (DPAP) that provides an interest-free loan of up to 5% of the purchase price of a home.
• First-time homebuyers (FTHB) may be exempt from the Real Property Transfer Tax, typically a 1% flat fee based on the purchase price or assessed value.
• In addition to provincial incentives, federal programs offer further financial support.

Prince Edward Island First-Time Home Buyer Incentives

The incentives available in PEI for first-time buyers are designed to reduce the upfront costs of homeownership. Assistance available includes down payment assistance through the Down Payment Assistance Program (DPAP) and an exemption on the Real Property Transfer Tax.

Prince Edward Island Down Payment Assistance Program

The Down Payment Assistance Program (DPAP) is a pilot program to help qualified residents with modest incomes purchase their first home. Under the program, eligible applicants can receive an interest-free loan for up to 5% of the purchase price of a home, up to a maximum of $17,500. The program will run until March 31, 2026, or until the allocated budget has been committed, whichever comes first. 

Repayments during the loan term are applied to the principal, and interest accrues at a fixed rate of 5% per annum during the loan term. The interest on the loan will be forgiven when the principal is repaid in full. If the applicant defaults on repayment obligations under the loan, the unpaid principal plus the accumulated accrued interest are due in full. 

Real Property Transfer Tax First-Time Home Buyers Exemption

This exemption waives the Real Property Transfer Tax for first-time buyers that would typically apply to registering a deed of conveyance in the province. Typically, buyers in PEI pay a 1% flat fee based on the greater purchase price or assessed value when purchasing a home. 

First-time buyers can have this fee waived as long as they meet the eligibility criteria, which include being a Canadian citizen or permanent resident and have resided in the province for at least 6 months before the registration date or filed a tax return in at least 2 of 6 tax years immediately before the registration date. 

Federal First-Time Home Buyer Programs

In addition to the incentives available in PEI, federal programs support first-time buyers in making homeownership more attainable and affordable.

Home Buyers’ Plan (HBP)

The Home Buyers’ Plan allows first-time home buyers to withdraw up to $60,000 from their Registered Retirement Savings Plan (RRSP). Withdrawals are tax-free if repayments are made in equal installments over 15 years. The plan also allows a 2-year grace period following the withdrawal, during which repayments are not required.

Home Buyers’ Amount

The home buyers’ amount allows first-time buyers to claim up to $10,000 on their tax return for a tax credit of up to $1,500 on their income tax return. 

GST/HST New Housing Rebate

The GST/HST New Housing Rebate helps reduce the cost of buying a new home. When purchasing a newly built or substantially renovated home, the rebate applies to the Goods and Services Tax (GST) or Harmonized Sales Tax (HST). The rebate amount will depend on the province where the home is located and whether it applies to the provincial portion of taxes and the federal tax. ing homes over $368,000. For homes below that price, you would not pay any land transfer taxes. 

Frequently Asked Questions (FAQ) on First-Time Home Buyers Incentives in PEI

Final Thoughts

Thanks to the province’s range of incentives, buying a home as a first-time buyer in Prince Edward Island can be more affordable. If you’re considering buying a home in PEI, take the time to explore all available incentives, including both provincial and federal, understand the eligibility requirements, and factor them into your financial planning. 

If you’re ready to purchase your first home, contact nesto mortgage experts today to find your best mortgage rate in Prince Edward Island.